Correlation Between Live Nation and Federal Realty
Can any of the company-specific risk be diversified away by investing in both Live Nation and Federal 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 Federal 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 Federal Realty Investment, you can compare the effects of market volatilities on Live Nation and Federal 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 Federal Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Federal Realty.
Diversification Opportunities for Live Nation and Federal Realty
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Live and Federal is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Federal Realty Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Realty Investment 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 Federal Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Realty Investment has no effect on the direction of Live Nation i.e., Live Nation and Federal Realty go up and down completely randomly.
Pair Corralation between Live Nation and Federal Realty
Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 1.7 times more return on investment than Federal Realty. However, Live Nation is 1.7 times more volatile than Federal Realty Investment. It trades about 0.09 of its potential returns per unit of risk. Federal Realty Investment is currently generating about 0.06 per unit of risk. If you would invest 9,431 in Live Nation Entertainment on September 14, 2024 and sell it today you would earn a total of 4,156 from holding Live Nation Entertainment or generate 44.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 96.05% |
| Values | Daily Returns |
Live Nation Entertainment vs. Federal Realty Investment
Performance |
| Timeline |
| Live Nation Entertainment |
| Federal Realty Investment |
Live Nation and Federal Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Federal Realty
The main advantage of trading using opposite Live Nation and Federal Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Federal 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 Federal Realty will offset losses from the drop in Federal Realty's long position.| Live Nation vs. Samsung Electronics Co | Live Nation vs. Samsung Electronics Co | Live Nation vs. Hyundai Motor | Live Nation vs. Reliance Industries Ltd |
| Federal Realty vs. Sparebank 1 SR | Federal Realty vs. MT Bank Corp | Federal Realty vs. Charter Communications Cl | Federal Realty vs. Discover Financial Services |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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