Correlation Between Live Nation and Mühlbauer Holding

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

Diversification Opportunities for Live Nation and Mühlbauer Holding

-0.85

Correlation Coefficient

Live Nation  Mühlbauer Holding

Pay attention - limited upside

The 3 months correlation between Live and Mühlbauer is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Mhlbauer Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mühlbauer Holding 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 Mühlbauer Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mühlbauer Holding has no effect on the direction of Live Nation i.e., Live Nation and Mühlbauer Holding go up and down completely randomly.

Pair Corralation between Live Nation and Mühlbauer Holding

Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.96 times more return on investment than Mühlbauer Holding. However, Live Nation Entertainment is 1.04 times less risky than Mühlbauer Holding. It trades about 0.07 of its potential returns per unit of risk. Mhlbauer Holding AG is currently generating about -0.03 per unit of risk. If you would invest  6,849  in Live Nation Entertainment on October 7, 2024 and sell it today you would earn a total of  5,681  from holding Live Nation Entertainment or generate 82.95% return on investment over 90 days.

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

Live Nation Entertainment  vs.  Mhlbauer Holding AG

Live Nation Entertainment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Live Nation reported solid returns over the last few months and may actually be approaching a breakup point.

Mühlbauer Holding

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Live Nation and Mühlbauer Holding

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

The idea behind Live Nation Entertainment and Mhlbauer Holding AG 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..