Correlation Between Live Ventures and Montana Technologies

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

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

Diversification Opportunities for Live Ventures and Montana Technologies

-0.5

Correlation Coefficient

Live Ventures  Montana Technologies

Very good diversification

The 3 months correlation between Live and Montana is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Montana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montana Technologies and Live Ventures 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 Ventures are associated (or correlated) with Montana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montana Technologies has no effect on the direction of Live Ventures i.e., Live Ventures and Montana Technologies go up and down completely randomly.

Pair Corralation between Live Ventures and Montana Technologies

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Montana Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Live Ventures is 2.88 times less risky than Montana Technologies. The stock trades about -0.03 of its potential returns per unit of risk. The Montana Technologies is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  83.00  in Montana Technologies on October 6, 2024 and sell it today you would earn a total of  35.00  from holding Montana Technologies or generate 42.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Live Ventures  vs.  Montana Technologies

Live Ventures

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Live Ventures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Montana Technologies

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Montana Technologies are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward-looking indicators, Montana Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Ventures and Montana Technologies

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

The idea behind Live Ventures and Montana Technologies 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.