Correlation Between Live Nation and Baillie Gifford

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

Diversification Opportunities for Live Nation and Baillie Gifford

0.42

Correlation Coefficient

Live Nation  Baillie Gifford

Very weak diversification

The 3 months correlation between Live and Baillie is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Baillie Gifford European in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford European 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 Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford European has no effect on the direction of Live Nation i.e., Live Nation and Baillie Gifford go up and down completely randomly.

Pair Corralation between Live Nation and Baillie Gifford

Assuming the 90 days trading horizon Live Nation Entertainment is expected to under-perform the Baillie Gifford. In addition to that, Live Nation is 1.73 times more volatile than Baillie Gifford European. It trades about -0.05 of its total potential returns per unit of risk. Baillie Gifford European is currently generating about 0.19 per unit of volatility. If you would invest  8,449  in Baillie Gifford European on December 22, 2024 and sell it today you would earn a total of  1,171  from holding Baillie Gifford European or generate 13.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Live Nation Entertainment  vs.  Baillie Gifford European

Live Nation Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Nation Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Baillie Gifford European

Risk-Adjusted Performance

Good

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

Pair Trading with Live Nation and Baillie Gifford

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

The idea behind Live Nation Entertainment and Baillie Gifford European 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.