Correlation Between Paramount Global and Live Nation
Can any of the company-specific risk be diversified away by investing in both Paramount Global 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 Paramount Global and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Paramount Global Class and Live Nation Entertainment, you can compare the effects of market volatilities on Paramount Global 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 Paramount Global with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Global and Live Nation.
Diversification Opportunities for Paramount Global and Live Nation
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Paramount and Live is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Global Class 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 Paramount Global 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 Paramount Global Class 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 Paramount Global i.e., Paramount Global and Live Nation go up and down completely randomly.
Pair Corralation between Paramount Global and Live Nation
Given the investment horizon of 90 days Paramount Global is expected to generate 2.46 times less return on investment than Live Nation. In addition to that, Paramount Global is 1.25 times more volatile than Live Nation Entertainment. It trades about 0.13 of its total potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.4 per unit of volatility. If you would invest 11,843 in Live Nation Entertainment on August 27, 2024 and sell it today you would earn a total of 2,186 from holding Live Nation Entertainment or generate 18.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Global Class vs. Live Nation Entertainment
Performance |
| Timeline |
| Paramount Global Class |
| Live Nation Entertainment |
Paramount Global and Live Nation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Global and Live Nation
The main advantage of trading using opposite Paramount Global and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Global 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.| Paramount Global vs. Walt Disney | Paramount Global vs. Roku Inc | Paramount Global vs. Netflix | Paramount Global vs. AMC Entertainment 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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