Correlation Between Eagle Materials and Live Nation
Can any of the company-specific risk be diversified away by investing in both Eagle Materials 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 Eagle Materials and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eagle Materials and Live Nation Entertainment, you can compare the effects of market volatilities on Eagle Materials 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 Eagle Materials with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagle Materials and Live Nation.
Diversification Opportunities for Eagle Materials and Live Nation
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eagle and Live is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Eagle Materials 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 Eagle Materials 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 Eagle Materials 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 Eagle Materials i.e., Eagle Materials and Live Nation go up and down completely randomly.
Pair Corralation between Eagle Materials and Live Nation
Assuming the 90 days horizon Eagle Materials is expected to under-perform the Live Nation. But the stock apears to be less risky and, when comparing its historical volatility, Eagle Materials is 1.08 times less risky than Live Nation. The stock trades about -0.1 of its potential returns per unit of risk. The Live Nation Entertainment is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 12,555 in Live Nation Entertainment on December 28, 2024 and sell it today you would lose (845.00) from holding Live Nation Entertainment or give up 6.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Eagle Materials vs. Live Nation Entertainment
Performance |
Timeline |
Eagle Materials |
Live Nation Entertainment |
Eagle Materials and Live Nation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Eagle Materials and Live Nation
The main advantage of trading using opposite Eagle Materials and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eagle Materials 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.Eagle Materials vs. SOFI TECHNOLOGIES | Eagle Materials vs. THORNEY TECHS LTD | Eagle Materials vs. Cleanaway Waste Management | Eagle Materials vs. GEELY AUTOMOBILE |
Live Nation vs. Dolby Laboratories | Live Nation vs. CTS Eventim AG | Live Nation vs. Toho Co | Live Nation vs. Lions Gate Entertainment |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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