Correlation Between Live Nation and Heavitree Brewery

Can any of the company-specific risk be diversified away by investing in both Live Nation and Heavitree Brewery at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Live Nation and Heavitree Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Live Nation Entertainment and Heavitree Brewery, you can compare the effects of market volatilities on Live Nation and Heavitree Brewery and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Live Nation with a short position of Heavitree Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Heavitree Brewery.

Diversification Opportunities for Live Nation and Heavitree Brewery

-0.86

Correlation Coefficient

Live Nation  Heavitree Brewery

Pay attention - limited upside

The 3 months correlation between Live and Heavitree is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Heavitree Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heavitree Brewery and Live Nation is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Live Nation Entertainment are associated (or correlated) with Heavitree Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heavitree Brewery has no effect on the direction of Live Nation i.e., Live Nation and Heavitree Brewery go up and down completely randomly.

Pair Corralation between Live Nation and Heavitree Brewery

Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 3.72 times more return on investment than Heavitree Brewery. However, Live Nation is 3.72 times more volatile than Heavitree Brewery. It trades about 0.17 of its potential returns per unit of risk. Heavitree Brewery is currently generating about -0.13 per unit of risk. If you would invest  11,443  in Live Nation Entertainment on October 20, 2024 and sell it today you would earn a total of  2,062  from holding Live Nation Entertainment or generate 18.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Live Nation Entertainment  vs.  Heavitree Brewery

Live Nation Entertainment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Live Nation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Heavitree Brewery

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heavitree Brewery has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Heavitree Brewery is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Live Nation and Heavitree Brewery

The main advantage of trading using opposite Live Nation and Heavitree Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Heavitree Brewery can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Heavitree Brewery will offset losses from the drop in Heavitree Brewery's long position.

The idea behind Live Nation Entertainment and Heavitree Brewery pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.