Correlation Between Heavitree Brewery and Live Nation

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

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

Diversification Opportunities for Heavitree Brewery and Live Nation

-0.85

Correlation Coefficient

Heavitree Brewery  Live Nation

Pay attention - limited upside

The 3 months correlation between Heavitree and Live is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery 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 Heavitree Brewery i.e., Heavitree Brewery and Live Nation go up and down completely randomly.

Pair Corralation between Heavitree Brewery and Live Nation

Assuming the 90 days trading horizon Heavitree Brewery is expected to generate 10.73 times less return on investment than Live Nation. But when comparing it to its historical volatility, Heavitree Brewery is 2.53 times less risky than Live Nation. It trades about 0.03 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  8,830  in Live Nation Entertainment on October 24, 2024 and sell it today you would earn a total of  5,041  from holding Live Nation Entertainment or generate 57.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.81%
Values	Daily Returns

Heavitree Brewery  vs.  Live Nation Entertainment

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.

Live Nation Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 14 (%) 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.

Pair Trading with Heavitree Brewery and Live Nation

The main advantage of trading using opposite Heavitree Brewery and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heavitree Brewery 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 Heavitree Brewery 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.

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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.