Correlation Between Live Nation and Universal Music
Can any of the company-specific risk be diversified away by investing in both Live Nation and Universal Music 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 Universal Music 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 Universal Music Group, you can compare the effects of market volatilities on Live Nation and Universal Music 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 Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Universal Music.
Diversification Opportunities for Live Nation and Universal Music
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Live and Universal is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group 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 Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Live Nation i.e., Live Nation and Universal Music go up and down completely randomly.
Pair Corralation between Live Nation and Universal Music
Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 0.7 times more return on investment than Universal Music. However, Live Nation Entertainment is 1.42 times less risky than Universal Music. It trades about 0.12 of its potential returns per unit of risk. Universal Music Group is currently generating about 0.0 per unit of risk. If you would invest 8,560 in Live Nation Entertainment on August 24, 2024 and sell it today you would earn a total of 5,284 from holding Live Nation Entertainment or generate 61.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.61% |
| Values | Daily Returns |
Live Nation Entertainment vs. Universal Music Group
Performance |
| Timeline |
| Live Nation Entertainment |
| Universal Music Group |
Live Nation and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Universal Music
The main advantage of trading using opposite Live Nation and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Universal Music 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 Universal Music will offset losses from the drop in Universal Music's long position.| Live Nation vs. JD Sports Fashion | Live Nation vs. Everyman Media Group | Live Nation vs. Atresmedia | Live Nation vs. MediaZest plc |
| Universal Music vs. Quadrise Plc | Universal Music vs. Intuitive Investments Group | Universal Music vs. European Metals Holdings | Universal Music vs. Athelney Trust 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world |