Correlation Between Live Nation and Roper Technologies

Can any of the company-specific risk be diversified away by investing in both Live Nation and Roper Technologies 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 Roper Technologies 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 Roper Technologies, you can compare the effects of market volatilities on Live Nation and Roper Technologies 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 Roper Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Roper Technologies.

Diversification Opportunities for Live Nation and Roper Technologies

0.08

Correlation Coefficient

Live Nation  Roper Technologies

Significant diversification

The 3 months correlation between Live and Roper is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Roper Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roper Technologies 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 Roper Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roper Technologies has no effect on the direction of Live Nation i.e., Live Nation and Roper Technologies go up and down completely randomly.

Pair Corralation between Live Nation and Roper Technologies

Assuming the 90 days trading horizon Live Nation is expected to generate 1.57 times less return on investment than Roper Technologies. But when comparing it to its historical volatility, Live Nation Entertainment is 7.06 times less risky than Roper Technologies. It trades about 0.17 of its potential returns per unit of risk. Roper Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  56,232  in Roper Technologies on September 30, 2024 and sell it today you would lose (3,763) from holding Roper Technologies or give up 6.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Live Nation Entertainment  vs.  Roper Technologies

Live Nation Entertainment

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Live Nation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Roper Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Roper Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Roper Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Live Nation and Roper Technologies

The main advantage of trading using opposite Live Nation and Roper Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Roper Technologies 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 Roper Technologies will offset losses from the drop in Roper Technologies' long position.

The idea behind Live Nation Entertainment and Roper Technologies 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.