Correlation Between Live Nation and NorAm Drilling
Can any of the company-specific risk be diversified away by investing in both Live Nation and NorAm Drilling 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 NorAm Drilling 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 NorAm Drilling AS, you can compare the effects of market volatilities on Live Nation and NorAm Drilling 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 NorAm Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and NorAm Drilling.
Diversification Opportunities for Live Nation and NorAm Drilling
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Live and NorAm is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and NorAm Drilling AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NorAm Drilling AS 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 NorAm Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NorAm Drilling AS has no effect on the direction of Live Nation i.e., Live Nation and NorAm Drilling go up and down completely randomly.
Pair Corralation between Live Nation and NorAm Drilling
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.58 times more return on investment than NorAm Drilling. However, Live Nation Entertainment is 1.73 times less risky than NorAm Drilling. It trades about 0.36 of its potential returns per unit of risk. NorAm Drilling AS is currently generating about 0.01 per unit of risk. If you would invest 10,770 in Live Nation Entertainment on August 28, 2024 and sell it today you would earn a total of 2,550 from holding Live Nation Entertainment or generate 23.68% 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. NorAm Drilling AS
Performance |
| Timeline |
| Live Nation Entertainment |
| NorAm Drilling AS |
Live Nation and NorAm Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and NorAm Drilling
The main advantage of trading using opposite Live Nation and NorAm Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, NorAm Drilling 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 NorAm Drilling will offset losses from the drop in NorAm Drilling'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 |
| NorAm Drilling vs. Air Transport Services | NorAm Drilling vs. Pembina Pipeline Corp | NorAm Drilling vs. NAKED WINES PLC | NorAm Drilling vs. Fukuyama Transporting 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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