Correlation Between Live Nation and Inspiration Healthcare
Can any of the company-specific risk be diversified away by investing in both Live Nation and Inspiration Healthcare 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 Inspiration Healthcare 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 Inspiration Healthcare Group, you can compare the effects of market volatilities on Live Nation and Inspiration Healthcare 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 Inspiration Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Inspiration Healthcare.
Diversification Opportunities for Live Nation and Inspiration Healthcare
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Live and Inspiration is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Inspiration Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inspiration Healthcare 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 Inspiration Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inspiration Healthcare has no effect on the direction of Live Nation i.e., Live Nation and Inspiration Healthcare go up and down completely randomly.
Pair Corralation between Live Nation and Inspiration Healthcare
Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 0.49 times more return on investment than Inspiration Healthcare. However, Live Nation Entertainment is 2.03 times less risky than Inspiration Healthcare. It trades about 0.07 of its potential returns per unit of risk. Inspiration Healthcare Group is currently generating about -0.05 per unit of risk. If you would invest 7,102 in Live Nation Entertainment on September 29, 2024 and sell it today you would earn a total of 5,946 from holding Live Nation Entertainment or generate 83.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
Live Nation Entertainment vs. Inspiration Healthcare Group
Performance |
| Timeline |
| Live Nation Entertainment |
| Inspiration Healthcare |
Live Nation and Inspiration Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Inspiration Healthcare
The main advantage of trading using opposite Live Nation and Inspiration Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Inspiration Healthcare 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 Inspiration Healthcare will offset losses from the drop in Inspiration Healthcare's long position.| Live Nation vs. Cornish Metals | Live Nation vs. Lowland Investment Co | Live Nation vs. Aurora Investment Trust | Live Nation vs. Host Hotels Resorts |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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