Correlation Between New Residential and Live Nation
Can any of the company-specific risk be diversified away by investing in both New Residential 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 New Residential and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Residential Investment and Live Nation Entertainment, you can compare the effects of market volatilities on New Residential 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 New Residential with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Residential and Live Nation.
Diversification Opportunities for New Residential and Live Nation
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Live is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding New Residential Investment 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 New Residential 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 New Residential Investment 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 New Residential i.e., New Residential and Live Nation go up and down completely randomly.
Pair Corralation between New Residential and Live Nation
Assuming the 90 days trading horizon New Residential Investment is expected to generate 0.57 times more return on investment than Live Nation. However, New Residential Investment is 1.77 times less risky than Live Nation. It trades about 0.05 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.02 per unit of risk. If you would invest 1,091 in New Residential Investment on December 29, 2024 and sell it today you would earn a total of 41.00 from holding New Residential Investment or generate 3.76% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
New Residential Investment vs. Live Nation Entertainment
Performance |
Timeline |
New Residential Inve |
Live Nation Entertainment |
New Residential and Live Nation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New Residential and Live Nation
The main advantage of trading using opposite New Residential and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Residential 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.New Residential vs. Samsung Electronics Co | New Residential vs. Toyota Motor Corp | New Residential vs. State Bank of | New Residential vs. SoftBank Group Corp |
Live Nation vs. Samsung Electronics Co | Live Nation vs. Toyota Motor Corp | Live Nation vs. State Bank of | Live Nation vs. SoftBank Group Corp |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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