Correlation Between Live Nation and Broadcom
Can any of the company-specific risk be diversified away by investing in both Live Nation and Broadcom 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 Broadcom 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 Broadcom, you can compare the effects of market volatilities on Live Nation and Broadcom 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 Broadcom. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Broadcom.
Diversification Opportunities for Live Nation and Broadcom
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Live and Broadcom is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Broadcom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadcom 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 Broadcom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadcom has no effect on the direction of Live Nation i.e., Live Nation and Broadcom go up and down completely randomly.
Pair Corralation between Live Nation and Broadcom
Assuming the 90 days trading horizon Live Nation is expected to generate 81.28 times less return on investment than Broadcom. But when comparing it to its historical volatility, Live Nation Entertainment is 51.08 times less risky than Broadcom. It trades about 0.06 of its potential returns per unit of risk. Broadcom is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,611 in Broadcom on October 12, 2024 and sell it today you would earn a total of 16,719 from holding Broadcom or generate 297.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Live Nation Entertainment vs. Broadcom
Performance |
| Timeline |
| Live Nation Entertainment |
| Broadcom |
Live Nation and Broadcom Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Broadcom
The main advantage of trading using opposite Live Nation and Broadcom positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Broadcom 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 Broadcom will offset losses from the drop in Broadcom's long position.| Live Nation vs. Software Circle plc | Live Nation vs. Scandic Hotels Group | Live Nation vs. Sabien Technology Group | Live Nation vs. Melia Hotels |
| Broadcom vs. Ubisoft Entertainment | Broadcom vs. Tatton Asset Management | Broadcom vs. Live Nation Entertainment | Broadcom vs. MediaZest 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 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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