Correlation Between First and Live Nation
Can any of the company-specific risk be diversified away by investing in both First 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 First and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Class Metals and Live Nation Entertainment, you can compare the effects of market volatilities on First 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 First with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of First and Live Nation.
Diversification Opportunities for First and Live Nation
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Live is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding First Class Metals 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 First 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 First Class Metals 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 First i.e., First and Live Nation go up and down completely randomly.
Pair Corralation between First and Live Nation
Assuming the 90 days trading horizon First Class Metals is expected to under-perform the Live Nation. In addition to that, First is 2.23 times more volatile than Live Nation Entertainment. It trades about -0.07 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.06 per unit of volatility. If you would invest 7,578 in Live Nation Entertainment on October 13, 2024 and sell it today you would earn a total of 5,410 from holding Live Nation Entertainment or generate 71.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
First Class Metals vs. Live Nation Entertainment
Performance |
| Timeline |
| First Class Metals |
| Live Nation Entertainment |
First and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First and Live Nation
The main advantage of trading using opposite First and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First 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.| First vs. Spirent Communications plc | First vs. Pets at Home | First vs. Cairn Homes PLC | First vs. Ecclesiastical Insurance Office |
| Live Nation vs. Fulcrum Metals PLC | Live Nation vs. First Class Metals | Live Nation vs. UNIQA Insurance Group | Live Nation vs. Broadcom |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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