Correlation Between Graham Holdings and Live Nation
Can any of the company-specific risk be diversified away by investing in both Graham Holdings 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 Graham Holdings and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graham Holdings Co and Live Nation Entertainment, you can compare the effects of market volatilities on Graham Holdings 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 Graham Holdings with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graham Holdings and Live Nation.
Diversification Opportunities for Graham Holdings and Live Nation
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Graham and Live is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Graham Holdings Co 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 Graham Holdings 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 Graham Holdings Co 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 Graham Holdings i.e., Graham Holdings and Live Nation go up and down completely randomly.
Pair Corralation between Graham Holdings and Live Nation
Considering the 90-day investment horizon Graham Holdings is expected to generate 1.03 times less return on investment than Live Nation. In addition to that, Graham Holdings is 1.52 times more volatile than Live Nation Entertainment. It trades about 0.25 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.4 per unit of volatility. If you would invest 11,473 in Live Nation Entertainment on August 24, 2024 and sell it today you would earn a total of 2,178 from holding Live Nation Entertainment or generate 18.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Graham Holdings Co vs. Live Nation Entertainment
Performance |
| Timeline |
| Graham Holdings |
| Live Nation Entertainment |
Graham Holdings and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graham Holdings and Live Nation
The main advantage of trading using opposite Graham Holdings and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graham Holdings 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.| Graham Holdings vs. Cable One | Graham Holdings vs. Adtalem Global Education | Graham Holdings vs. Axalta Coating Systems | Graham Holdings vs. Madison Square Garden |
| Live Nation vs. Liberty Media | Live Nation vs. Atlanta Braves Holdings, | Live Nation vs. News Corp B | Live Nation vs. News Corp A |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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