Correlation Between Live Nation and Warner Music
Can any of the company-specific risk be diversified away by investing in both Live Nation and Warner Music 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 Warner Music 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 Warner Music Group, you can compare the effects of market volatilities on Live Nation and Warner Music 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 Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Warner Music.
Diversification Opportunities for Live Nation and Warner Music
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Live and Warner is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Live Nation i.e., Live Nation and Warner Music go up and down completely randomly.
Pair Corralation between Live Nation and Warner Music
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.03 times more return on investment than Warner Music. However, Live Nation is 1.03 times more volatile than Warner Music Group. It trades about 0.19 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.04 per unit of risk. If you would invest 8,254 in Live Nation Entertainment on September 15, 2024 and sell it today you would earn a total of 4,476 from holding Live Nation Entertainment or generate 54.23% 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. Warner Music Group
Performance |
| Timeline |
| Live Nation Entertainment |
| Warner Music Group |
Live Nation and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Warner Music
The main advantage of trading using opposite Live Nation and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.| Live Nation vs. Toho Co | Live Nation vs. Superior Plus Corp | Live Nation vs. NMI Holdings | Live Nation vs. SIVERS SEMICONDUCTORS AB |
| Warner Music vs. REINET INVESTMENTS SCA | Warner Music vs. HK Electric Investments | Warner Music vs. GUARDANT HEALTH CL | Warner Music vs. REGAL ASIAN INVESTMENTS |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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