Correlation Between CNH Industrial and Live Nation
Can any of the company-specific risk be diversified away by investing in both CNH Industrial and Live Nation 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 CNH Industrial and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CNH Industrial NV and Live Nation Entertainment, you can compare the effects of market volatilities on CNH Industrial and Live Nation 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 CNH Industrial with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNH Industrial and Live Nation.
Diversification Opportunities for CNH Industrial and Live Nation
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CNH and Live is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CNH Industrial NV and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and CNH Industrial 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 CNH Industrial NV are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of CNH Industrial i.e., CNH Industrial and Live Nation go up and down completely randomly.
Pair Corralation between CNH Industrial and Live Nation
Assuming the 90 days trading horizon CNH Industrial is expected to generate 11.64 times less return on investment than Live Nation. In addition to that, CNH Industrial is 1.14 times more volatile than Live Nation Entertainment. It trades about 0.01 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.1 per unit of volatility. If you would invest 7,710 in Live Nation Entertainment on September 12, 2024 and sell it today you would earn a total of 5,215 from holding Live Nation Entertainment or generate 67.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.7% |
| Values | Daily Returns |
CNH Industrial NV vs. Live Nation Entertainment
Performance |
| Timeline |
| CNH Industrial NV |
| Live Nation Entertainment |
CNH Industrial and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CNH Industrial and Live Nation
The main advantage of trading using opposite CNH Industrial and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CNH Industrial position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| CNH Industrial vs. PT Indofood Sukses | CNH Industrial vs. Lery Seafood Group | CNH Industrial vs. Tyson Foods | CNH Industrial vs. INDOFOOD AGRI RES |
| Live Nation vs. SLR Investment Corp | Live Nation vs. Gladstone Investment | Live Nation vs. CapitaLand Investment Limited | Live Nation vs. PPHE HOTEL GROUP |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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