Correlation Between Live Ventures and Waste Management

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

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

Diversification Opportunities for Live Ventures and Waste Management

-0.11

Correlation Coefficient

Live Ventures  Waste Management

Good diversification

The 3 months correlation between Live and Waste is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Live Ventures and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Live Ventures i.e., Live Ventures and Waste Management go up and down completely randomly.

Pair Corralation between Live Ventures and Waste Management

Given the investment horizon of 90 days Live Ventures is expected to under-perform the Waste Management. In addition to that, Live Ventures is 3.54 times more volatile than Waste Management. It trades about -0.1 of its total potential returns per unit of risk. Waste Management is currently generating about -0.03 per unit of volatility. If you would invest  21,279  in Waste Management on October 12, 2024 and sell it today you would lose (554.00) from holding Waste Management or give up 2.6% of portfolio value over 90 days.

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

Live Ventures  vs.  Waste Management

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.

Waste Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Waste Management is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Live Ventures and Waste Management

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

The idea behind Live Ventures and Waste Management 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.