Correlation Between Live Nation and Cinemark Holdings
Can any of the company-specific risk be diversified away by investing in both Live Nation and Cinemark Holdings 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 Cinemark Holdings 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 Cinemark Holdings, you can compare the effects of market volatilities on Live Nation and Cinemark Holdings 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 Cinemark Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Cinemark Holdings.
Diversification Opportunities for Live Nation and Cinemark Holdings
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and Cinemark is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Cinemark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cinemark 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 Cinemark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cinemark Holdings has no effect on the direction of Live Nation i.e., Live Nation and Cinemark Holdings go up and down completely randomly.
Pair Corralation between Live Nation and Cinemark Holdings
Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 1.05 times more return on investment than Cinemark Holdings. However, Live Nation is 1.05 times more volatile than Cinemark Holdings. It trades about 0.4 of its potential returns per unit of risk. Cinemark Holdings is currently generating about 0.29 per unit of risk. If you would invest 11,568 in Live Nation Entertainment on August 23, 2024 and sell it today you would earn a total of 2,289 from holding Live Nation Entertainment or generate 19.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Live Nation Entertainment vs. Cinemark Holdings
Performance |
| Timeline |
| Live Nation Entertainment |
| Cinemark Holdings |
Live Nation and Cinemark Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Cinemark Holdings
The main advantage of trading using opposite Live Nation and Cinemark Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Cinemark Holdings 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 Cinemark Holdings will offset losses from the drop in Cinemark Holdings' 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 |
| Cinemark Holdings vs. News Corp B | Cinemark Holdings vs. Marcus | Cinemark Holdings vs. Liberty Media | Cinemark Holdings vs. Warner Music Group |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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