Correlation Between Live Nation and CVW CLEANTECH

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

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

Diversification Opportunities for Live Nation and CVW CLEANTECH

0.59

Correlation Coefficient

Live Nation  CVW CLEANTECH

Very weak diversification

The 3 months correlation between Live and CVW is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and CVW CLEANTECH INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVW CLEANTECH INC and Live Nation 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 Nation Entertainment are associated (or correlated) with CVW CLEANTECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVW CLEANTECH INC has no effect on the direction of Live Nation i.e., Live Nation and CVW CLEANTECH go up and down completely randomly.

Pair Corralation between Live Nation and CVW CLEANTECH

Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.9 times more return on investment than CVW CLEANTECH. However, Live Nation Entertainment is 1.11 times less risky than CVW CLEANTECH. It trades about 0.23 of its potential returns per unit of risk. CVW CLEANTECH INC is currently generating about 0.05 per unit of risk. If you would invest  9,688  in Live Nation Entertainment on September 30, 2024 and sell it today you would earn a total of  2,992  from holding Live Nation Entertainment or generate 30.88% return on investment over 90 days.

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

Live Nation Entertainment  vs.  CVW CLEANTECH INC

Live Nation Entertainment

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Live Nation reported solid returns over the last few months and may actually be approaching a breakup point.

CVW CLEANTECH INC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CVW CLEANTECH INC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, CVW CLEANTECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Live Nation and CVW CLEANTECH

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

The idea behind Live Nation Entertainment and CVW CLEANTECH INC 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.