Correlation Between Madison Square and Live Nation
Can any of the company-specific risk be diversified away by investing in both Madison Square 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 Madison Square and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Madison Square Garden and Live Nation Entertainment, you can compare the effects of market volatilities on Madison Square 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 Madison Square with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Madison Square and Live Nation.
Diversification Opportunities for Madison Square and Live Nation
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Madison and Live is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Madison Square Garden 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 Madison Square 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 Madison Square Garden 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 Madison Square i.e., Madison Square and Live Nation go up and down completely randomly.
Pair Corralation between Madison Square and Live Nation
Given the investment horizon of 90 days Madison Square is expected to generate 4.15 times less return on investment than Live Nation. But when comparing it to its historical volatility, Madison Square Garden is 1.6 times less risky than Live Nation. It trades about 0.15 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.4 of returns per unit of risk over similar time horizon. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Madison Square Garden vs. Live Nation Entertainment
Performance |
| Timeline |
| Madison Square Garden |
| Live Nation Entertainment |
Madison Square and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Madison Square and Live Nation
The main advantage of trading using opposite Madison Square and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Madison Square 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.| Madison Square vs. Atlanta Braves Holdings, | Madison Square vs. Liberty Media | Madison Square vs. Liberty Media | Madison Square vs. Atlanta Braves Holdings, |
| Live Nation vs. Liberty Media | Live Nation vs. Atlanta Braves Holdings, | Live Nation vs. News Corp B | Live Nation vs. News Corp A |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |