Correlation Between EHEALTH and Live Nation
Can any of the company-specific risk be diversified away by investing in both EHEALTH and Live Nation 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 EHEALTH and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EHEALTH and Live Nation Entertainment, you can compare the effects of market volatilities on EHEALTH and Live Nation 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 EHEALTH with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of EHEALTH and Live Nation.
Diversification Opportunities for EHEALTH and Live Nation
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EHEALTH and Live is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding EHEALTH and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and EHEALTH 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 EHEALTH are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of EHEALTH i.e., EHEALTH and Live Nation go up and down completely randomly.
Pair Corralation between EHEALTH and Live Nation
Assuming the 90 days trading horizon EHEALTH is expected to under-perform the Live Nation. In addition to that, EHEALTH is 2.4 times more volatile than Live Nation Entertainment. It trades about -0.01 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.12 per unit of volatility. If you would invest 7,880 in Live Nation Entertainment on September 4, 2024 and sell it today you would earn a total of 5,305 from holding Live Nation Entertainment or generate 67.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
EHEALTH vs. Live Nation Entertainment
Performance |
| Timeline |
| EHEALTH |
| Live Nation Entertainment |
EHEALTH and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EHEALTH and Live Nation
The main advantage of trading using opposite EHEALTH and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EHEALTH position performs unexpectedly, Live Nation 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 Live Nation will offset losses from the drop in Live Nation's long position.The idea behind EHEALTH and Live Nation Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Live Nation vs. Dolby Laboratories | Live Nation vs. CTS Eventim AG | Live Nation vs. Toho Co | Live Nation vs. Lions Gate Entertainment |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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