Correlation Between Live Nation and PepsiCo
Can any of the company-specific risk be diversified away by investing in both Live Nation and PepsiCo 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 PepsiCo 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 PepsiCo, you can compare the effects of market volatilities on Live Nation and PepsiCo 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 PepsiCo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and PepsiCo.
Diversification Opportunities for Live Nation and PepsiCo
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Live and PepsiCo is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and PepsiCo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepsiCo 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 PepsiCo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepsiCo has no effect on the direction of Live Nation i.e., Live Nation and PepsiCo go up and down completely randomly.
Pair Corralation between Live Nation and PepsiCo
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.86 times more return on investment than PepsiCo. However, Live Nation is 1.86 times more volatile than PepsiCo. It trades about 0.08 of its potential returns per unit of risk. PepsiCo is currently generating about 0.0 per unit of risk. If you would invest 6,619 in Live Nation Entertainment on September 12, 2024 and sell it today you would earn a total of 6,306 from holding Live Nation Entertainment or generate 95.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. PepsiCo
Performance |
| Timeline |
| Live Nation Entertainment |
| PepsiCo |
Live Nation and PepsiCo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and PepsiCo
The main advantage of trading using opposite Live Nation and PepsiCo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, PepsiCo 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 PepsiCo will offset losses from the drop in PepsiCo's long position.| Live Nation vs. SLR Investment Corp | Live Nation vs. Gladstone Investment | Live Nation vs. CapitaLand Investment Limited | Live Nation vs. PPHE HOTEL GROUP |
| PepsiCo vs. Live Nation Entertainment | PepsiCo vs. COSTCO WHOLESALE CDR | PepsiCo vs. PLAYSTUDIOS A DL 0001 | PepsiCo vs. Fast Retailing Co |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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