Correlation Between Live Nation and Fastenal
Can any of the company-specific risk be diversified away by investing in both Live Nation and Fastenal 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 Fastenal 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 Fastenal Company, you can compare the effects of market volatilities on Live Nation and Fastenal 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 Fastenal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Fastenal.
Diversification Opportunities for Live Nation and Fastenal
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Live and Fastenal is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal 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 Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of Live Nation i.e., Live Nation and Fastenal go up and down completely randomly.
Pair Corralation between Live Nation and Fastenal
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.59 times more return on investment than Fastenal. However, Live Nation is 1.59 times more volatile than Fastenal Company. It trades about 0.32 of its potential returns per unit of risk. Fastenal Company is currently generating about 0.26 per unit of risk. If you would invest 10,760 in Live Nation Entertainment on September 5, 2024 and sell it today you would earn a total of 2,305 from holding Live Nation Entertainment or generate 21.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Fastenal Company
Performance |
| Timeline |
| Live Nation Entertainment |
| Fastenal |
Live Nation and Fastenal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Fastenal
The main advantage of trading using opposite Live Nation and Fastenal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Fastenal 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 Fastenal will offset losses from the drop in Fastenal's long position.| Live Nation vs. Tradeweb Markets | Live Nation vs. The Trade Desk | Live Nation vs. SIDETRADE EO 1 | Live Nation vs. Fast Retailing Co |
| Fastenal vs. ARROW ELECTRONICS | Fastenal vs. CECO ENVIRONMENTAL | Fastenal vs. KIMBALL ELECTRONICS | Fastenal vs. BLUESCOPE STEEL |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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