Correlation Between Live Nation and Berkshire Hathaway
Can any of the company-specific risk be diversified away by investing in both Live Nation and Berkshire Hathaway 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 Berkshire Hathaway 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 Berkshire Hathaway, you can compare the effects of market volatilities on Live Nation and Berkshire Hathaway 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 Berkshire Hathaway. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Berkshire Hathaway.
Diversification Opportunities for Live Nation and Berkshire Hathaway
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and Berkshire is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Berkshire Hathaway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Berkshire Hathaway 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 Berkshire Hathaway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Berkshire Hathaway has no effect on the direction of Live Nation i.e., Live Nation and Berkshire Hathaway go up and down completely randomly.
Pair Corralation between Live Nation and Berkshire Hathaway
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.57 times more return on investment than Berkshire Hathaway. However, Live Nation is 1.57 times more volatile than Berkshire Hathaway. It trades about 0.37 of its potential returns per unit of risk. Berkshire Hathaway is currently generating about 0.22 per unit of risk. If you would invest 10,705 in Live Nation Entertainment on August 26, 2024 and sell it today you would earn a total of 2,615 from holding Live Nation Entertainment or generate 24.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Berkshire Hathaway
Performance |
| Timeline |
| Live Nation Entertainment |
| Berkshire Hathaway |
Live Nation and Berkshire Hathaway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Berkshire Hathaway
The main advantage of trading using opposite Live Nation and Berkshire Hathaway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Berkshire Hathaway 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 Berkshire Hathaway will offset losses from the drop in Berkshire Hathaway's long position.| Live Nation vs. Superior Plus Corp | Live Nation vs. NMI Holdings | Live Nation vs. Origin Agritech | Live Nation vs. SIVERS SEMICONDUCTORS AB |
| Berkshire Hathaway vs. Flutter Entertainment PLC | Berkshire Hathaway vs. Mitsui Chemicals | Berkshire Hathaway vs. Live Nation Entertainment | Berkshire Hathaway vs. Media and Games |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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