Correlation Between Live Nation and Cleveland Cliffs
Can any of the company-specific risk be diversified away by investing in both Live Nation and Cleveland Cliffs 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 Cleveland Cliffs 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 Cleveland Cliffs, you can compare the effects of market volatilities on Live Nation and Cleveland Cliffs 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 Cleveland Cliffs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Cleveland Cliffs.
Diversification Opportunities for Live Nation and Cleveland Cliffs
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and Cleveland is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Cleveland Cliffs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleveland Cliffs 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 Cleveland Cliffs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleveland Cliffs has no effect on the direction of Live Nation i.e., Live Nation and Cleveland Cliffs go up and down completely randomly.
Pair Corralation between Live Nation and Cleveland Cliffs
Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 0.45 times more return on investment than Cleveland Cliffs. However, Live Nation Entertainment is 2.23 times less risky than Cleveland Cliffs. It trades about 0.59 of its potential returns per unit of risk. Cleveland Cliffs is currently generating about 0.19 per unit of risk. If you would invest 12,749 in Live Nation Entertainment on November 3, 2024 and sell it today you would earn a total of 1,727 from holding Live Nation Entertainment or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Cleveland Cliffs
Performance |
| Timeline |
| Live Nation Entertainment |
| Cleveland Cliffs |
Live Nation and Cleveland Cliffs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Cleveland Cliffs
The main advantage of trading using opposite Live Nation and Cleveland Cliffs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Cleveland Cliffs 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 Cleveland Cliffs will offset losses from the drop in Cleveland Cliffs' long position.| Live Nation vs. United States Steel | Live Nation vs. Broadridge Financial Solutions | Live Nation vs. Impax Environmental Markets | Live Nation vs. Foresight Environmental Infrastructure |
| Cleveland Cliffs vs. Verizon Communications | Cleveland Cliffs vs. Broadridge Financial Solutions | Cleveland Cliffs vs. Gamma Communications PLC | Cleveland Cliffs vs. GlobalData PLC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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