Correlation Between Live Nation and Paramount Global
Can any of the company-specific risk be diversified away by investing in both Live Nation and Paramount Global 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 Paramount Global 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 Paramount Global Class, you can compare the effects of market volatilities on Live Nation and Paramount Global 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 Paramount Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Paramount Global.
Diversification Opportunities for Live Nation and Paramount Global
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Live and Paramount is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Live Nation i.e., Live Nation and Paramount Global go up and down completely randomly.
Pair Corralation between Live Nation and Paramount Global
Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 1.37 times more return on investment than Paramount Global. However, Live Nation is 1.37 times more volatile than Paramount Global Class. It trades about 0.41 of its potential returns per unit of risk. Paramount Global Class is currently generating about 0.06 per unit of risk. If you would invest 9,534 in Live Nation Entertainment on August 31, 2024 and sell it today you would earn a total of 4,439 from holding Live Nation Entertainment or generate 46.56% 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. Paramount Global Class
Performance |
| Timeline |
| Live Nation Entertainment |
| Paramount Global Class |
Live Nation and Paramount Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Live Nation and Paramount Global
The main advantage of trading using opposite Live Nation and Paramount Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Paramount Global 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 Paramount Global will offset losses from the drop in Paramount Global'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 |
| Paramount Global vs. Fox Corp Class | Paramount Global vs. News Corp A | Paramount Global vs. News Corp B | Paramount Global vs. Liberty Media |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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