Correlation Between Booking Holdings and Live Nation
Can any of the company-specific risk be diversified away by investing in both Booking Holdings 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 Booking Holdings and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Booking Holdings and Live Nation Entertainment, you can compare the effects of market volatilities on Booking Holdings 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 Booking Holdings with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Booking Holdings and Live Nation.
Diversification Opportunities for Booking Holdings and Live Nation
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Booking and Live is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Booking Holdings 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 Booking Holdings 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 Booking Holdings 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 Booking Holdings i.e., Booking Holdings and Live Nation go up and down completely randomly.
Pair Corralation between Booking Holdings and Live Nation
Assuming the 90 days trading horizon Booking Holdings is expected to generate 11.62 times more return on investment than Live Nation. However, Booking Holdings is 11.62 times more volatile than Live Nation Entertainment. It trades about 0.07 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about 0.17 per unit of risk. If you would invest 433,813 in Booking Holdings on October 26, 2024 and sell it today you would earn a total of 27,673 from holding Booking Holdings or generate 6.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 96.77% |
Values | Daily Returns |
Booking Holdings vs. Live Nation Entertainment
Performance |
Timeline |
Booking Holdings |
Live Nation Entertainment |
Booking Holdings and Live Nation Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Booking Holdings and Live Nation
The main advantage of trading using opposite Booking Holdings and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Booking Holdings 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.Booking Holdings vs. Air Products Chemicals | Booking Holdings vs. Gamma Communications PLC | Booking Holdings vs. Vienna Insurance Group | Booking Holdings vs. mobilezone holding AG |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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