Correlation Between Live Nation and Cumulus Media
Can any of the company-specific risk be diversified away by investing in both Live Nation and Cumulus Media 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 Cumulus Media 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 Cumulus Media Class, you can compare the effects of market volatilities on Live Nation and Cumulus Media 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 Cumulus Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Cumulus Media.
Diversification Opportunities for Live Nation and Cumulus Media
-0.94 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Live and Cumulus is -0.94. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Cumulus Media Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cumulus Media Class 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 Cumulus Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cumulus Media Class has no effect on the direction of Live Nation i.e., Live Nation and Cumulus Media go up and down completely randomly.
Pair Corralation between Live Nation and Cumulus Media
Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 0.31 times more return on investment than Cumulus Media. However, Live Nation Entertainment is 3.22 times less risky than Cumulus Media. It trades about 0.21 of its potential returns per unit of risk. Cumulus Media Class is currently generating about -0.18 per unit of risk. If you would invest 9,489 in Live Nation Entertainment on August 24, 2024 and sell it today you would earn a total of 4,368 from holding Live Nation Entertainment or generate 46.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Cumulus Media Class
Performance |
| Timeline |
| Live Nation Entertainment |
| Cumulus Media Class |
Live Nation and Cumulus Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Cumulus Media
The main advantage of trading using opposite Live Nation and Cumulus Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Cumulus Media 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 Cumulus Media will offset losses from the drop in Cumulus Media's long position.| Live Nation vs. Liberty Media | Live Nation vs. Atlanta Braves Holdings, | Live Nation vs. News Corp B | Live Nation vs. News Corp A |
| Cumulus Media vs. E W Scripps | Cumulus Media vs. Gray Television | Cumulus Media vs. ProSiebenSat1 Media AG | Cumulus Media vs. RTL Group SA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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