Correlation Between Live Ventures and Nordstrom

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

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

Diversification Opportunities for Live Ventures and Nordstrom

-0.27

Correlation Coefficient

Live Ventures  Nordstrom

Very good diversification

The 3 months correlation between Live and Nordstrom is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Nordstrom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordstrom 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 Nordstrom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordstrom has no effect on the direction of Live Ventures i.e., Live Ventures and Nordstrom go up and down completely randomly.

Pair Corralation between Live Ventures and Nordstrom

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Nordstrom. In addition to that, Live Ventures is 1.08 times more volatile than Nordstrom. It trades about -0.06 of its total potential returns per unit of risk. Nordstrom is currently generating about 0.03 per unit of volatility. If you would invest  1,944  in Nordstrom on October 24, 2024 and sell it today you would earn a total of  476.50  from holding Nordstrom or generate 24.51% return on investment over 90 days.

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

Live Ventures  vs.  Nordstrom

Live Ventures

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Live Ventures are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Live Ventures is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nordstrom

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nordstrom are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Nordstrom may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Live Ventures and Nordstrom

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

The idea behind Live Ventures and Nordstrom 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.