Correlation Between Live Nation and Norsk Hydro
Can any of the company-specific risk be diversified away by investing in both Live Nation and Norsk Hydro 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 Norsk Hydro 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 Norsk Hydro ASA, you can compare the effects of market volatilities on Live Nation and Norsk Hydro 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 Norsk Hydro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Norsk Hydro.
Diversification Opportunities for Live Nation and Norsk Hydro
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Live and Norsk is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Norsk Hydro ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norsk Hydro ASA 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 Norsk Hydro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norsk Hydro ASA has no effect on the direction of Live Nation i.e., Live Nation and Norsk Hydro go up and down completely randomly.
Pair Corralation between Live Nation and Norsk Hydro
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.88 times more return on investment than Norsk Hydro. However, Live Nation Entertainment is 1.14 times less risky than Norsk Hydro. It trades about 0.19 of its potential returns per unit of risk. Norsk Hydro ASA is currently generating about -0.07 per unit of risk. If you would invest 10,555 in Live Nation Entertainment on September 22, 2024 and sell it today you would earn a total of 2,110 from holding Live Nation Entertainment or generate 19.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Norsk Hydro ASA
Performance |
| Timeline |
| Live Nation Entertainment |
| Norsk Hydro ASA |
Live Nation and Norsk Hydro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Norsk Hydro
The main advantage of trading using opposite Live Nation and Norsk Hydro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Norsk Hydro 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 Norsk Hydro will offset losses from the drop in Norsk Hydro's long position.| Live Nation vs. DICKS Sporting Goods | Live Nation vs. Fukuyama Transporting Co | Live Nation vs. Transport International Holdings | Live Nation vs. PARKEN Sport Entertainment |
| Norsk Hydro vs. Perseus Mining Limited | Norsk Hydro vs. Ryanair Holdings plc | Norsk Hydro vs. SEALED AIR | Norsk Hydro vs. Harmony Gold Mining |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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