Correlation Between Live Nation and Digital Realty
Can any of the company-specific risk be diversified away by investing in both Live Nation and Digital Realty 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 Digital Realty 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 Digital Realty Trust, you can compare the effects of market volatilities on Live Nation and Digital Realty 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 Digital Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Digital Realty.
Diversification Opportunities for Live Nation and Digital Realty
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Live and Digital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Digital Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Realty Trust 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 Digital Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Realty Trust has no effect on the direction of Live Nation i.e., Live Nation and Digital Realty go up and down completely randomly.
Pair Corralation between Live Nation and Digital Realty
Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 1.0 times more return on investment than Digital Realty. However, Live Nation Entertainment is 1.0 times less risky than Digital Realty. It trades about 0.19 of its potential returns per unit of risk. Digital Realty Trust is currently generating about 0.08 per unit of risk. If you would invest 13,215 in Live Nation Entertainment on September 18, 2024 and sell it today you would earn a total of 573.00 from holding Live Nation Entertainment or generate 4.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Live Nation Entertainment vs. Digital Realty Trust
Performance |
| Timeline |
| Live Nation Entertainment |
| Digital Realty Trust |
Live Nation and Digital Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Digital Realty
The main advantage of trading using opposite Live Nation and Digital Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Digital Realty 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 Digital Realty will offset losses from the drop in Digital Realty's long position.| Live Nation vs. Anglesey Mining | Live Nation vs. Blackrock World Mining | Live Nation vs. Caledonia Mining | Live Nation vs. GoldMining |
| Digital Realty vs. One Media iP | Digital Realty vs. Zoom Video Communications | Digital Realty vs. Live Nation Entertainment | Digital Realty vs. Charter Communications Cl |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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