Correlation Between Live Nation and Bread Financial
Can any of the company-specific risk be diversified away by investing in both Live Nation and Bread Financial 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 Bread Financial 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 Bread Financial Holdings, you can compare the effects of market volatilities on Live Nation and Bread Financial 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 Bread Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Bread Financial.
Diversification Opportunities for Live Nation and Bread Financial
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Live and Bread is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment, and Bread Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bread Financial Holdings 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 Bread Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bread Financial Holdings has no effect on the direction of Live Nation i.e., Live Nation and Bread Financial go up and down completely randomly.
Pair Corralation between Live Nation and Bread Financial
Assuming the 90 days trading horizon Live Nation Entertainment, is expected to generate 0.45 times more return on investment than Bread Financial. However, Live Nation Entertainment, is 2.2 times less risky than Bread Financial. It trades about 0.09 of its potential returns per unit of risk. Bread Financial Holdings is currently generating about 0.01 per unit of risk. If you would invest 16,282 in Live Nation Entertainment, on October 31, 2024 and sell it today you would earn a total of 394.00 from holding Live Nation Entertainment, or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment, vs. Bread Financial Holdings
Performance |
| Timeline |
| Live Nation Entertai |
| Bread Financial Holdings |
Live Nation and Bread Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Bread Financial
The main advantage of trading using opposite Live Nation and Bread Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Bread Financial 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 Bread Financial will offset losses from the drop in Bread Financial's long position.| Live Nation vs. Alaska Air Group, | Live Nation vs. Guidewire Software, | Live Nation vs. CVS Health | Live Nation vs. Pentair plc |
| Bread Financial vs. Jefferies Financial Group | Bread Financial vs. Bank of America | Bread Financial vs. Pentair plc | Bread Financial vs. Credit Acceptance |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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