Correlation Between Live Nation and Capital One
Can any of the company-specific risk be diversified away by investing in both Live Nation and Capital One 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 Capital One 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 Capital One Financial, you can compare the effects of market volatilities on Live Nation and Capital One 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 Capital One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Capital One.
Diversification Opportunities for Live Nation and Capital One
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Live and Capital is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment, and Capital One Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital One Financial 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 Capital One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital One Financial has no effect on the direction of Live Nation i.e., Live Nation and Capital One go up and down completely randomly.
Pair Corralation between Live Nation and Capital One
Assuming the 90 days trading horizon Live Nation Entertainment, is expected to generate 0.63 times more return on investment than Capital One. However, Live Nation Entertainment, is 1.6 times less risky than Capital One. It trades about 0.33 of its potential returns per unit of risk. Capital One Financial is currently generating about 0.2 per unit of risk. If you would invest 15,786 in Live Nation Entertainment, on November 5, 2024 and sell it today you would earn a total of 1,061 from holding Live Nation Entertainment, or generate 6.72% 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. Capital One Financial
Performance |
| Timeline |
| Live Nation Entertai |
| Capital One Financial |
Live Nation and Capital One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Capital One
The main advantage of trading using opposite Live Nation and Capital One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Capital One 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 Capital One will offset losses from the drop in Capital One's long position.| Live Nation vs. Intelbras SA | Live Nation vs. Neogrid Participaes SA | Live Nation vs. Mliuz SA | Live Nation vs. Locaweb Servios de |
| Capital One vs. Visa Inc | Capital One vs. Mastercard Incorporated | Capital One vs. American Express | Capital One vs. PayPal Holdings |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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