Correlation Between Capital Metals and Live Nation

Can any of the company-specific risk be diversified away by investing in both Capital Metals and Live Nation 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 Capital Metals and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Capital Metals PLC and Live Nation Entertainment, you can compare the effects of market volatilities on Capital Metals and Live Nation 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 Capital Metals with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Metals and Live Nation.

Diversification Opportunities for Capital Metals and Live Nation

-0.36

Correlation Coefficient

Capital Metals  Live Nation

Very good diversification

The 3 months correlation between Capital and Live is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Capital Metals PLC and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and Capital Metals 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 Capital Metals PLC are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Capital Metals i.e., Capital Metals and Live Nation go up and down completely randomly.

Pair Corralation between Capital Metals and Live Nation

Assuming the 90 days trading horizon Capital Metals PLC is expected to under-perform the Live Nation. In addition to that, Capital Metals is 1.49 times more volatile than Live Nation Entertainment. It trades about -0.33 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.19 per unit of volatility. If you would invest  13,587  in Live Nation Entertainment on October 10, 2024 and sell it today you would lose (631.00) from holding Live Nation Entertainment or give up 4.64% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Capital Metals PLC  vs.  Live Nation Entertainment

Capital Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capital Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Capital Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Live Nation Entertainment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Live Nation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Capital Metals and Live Nation

The main advantage of trading using opposite Capital Metals and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Metals position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.

The idea behind Capital Metals PLC and Live Nation Entertainment 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.