Correlation Between National Retail and Live Nation
Can any of the company-specific risk be diversified away by investing in both National Retail and Live Nation 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 National Retail and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Retail Properties and Live Nation Entertainment, you can compare the effects of market volatilities on National Retail and Live Nation 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 National Retail with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Retail and Live Nation.
Diversification Opportunities for National Retail and Live Nation
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between National and Live is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and National Retail 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 National Retail Properties are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of National Retail i.e., National Retail and Live Nation go up and down completely randomly.
Pair Corralation between National Retail and Live Nation
Assuming the 90 days trading horizon National Retail is expected to generate 6.11 times less return on investment than Live Nation. But when comparing it to its historical volatility, National Retail Properties is 1.36 times less risky than Live Nation. It trades about 0.04 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,254 in Live Nation Entertainment on September 14, 2024 and sell it today you would earn a total of 4,416 from holding Live Nation Entertainment or generate 53.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Retail Properties vs. Live Nation Entertainment
Performance |
| Timeline |
| National Retail Prop |
| Live Nation Entertainment |
National Retail and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Retail and Live Nation
The main advantage of trading using opposite National Retail and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Retail position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.| National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc | National Retail vs. Apple Inc |
| Live Nation vs. National Retail Properties | Live Nation vs. Retail Estates NV | Live Nation vs. Evolution Mining Limited | Live Nation vs. SERI INDUSTRIAL EO |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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