Correlation Between Live Nation and Nexstar Media
Can any of the company-specific risk be diversified away by investing in both Live Nation and Nexstar Media 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 Nexstar Media 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 Nexstar Media Group, you can compare the effects of market volatilities on Live Nation and Nexstar Media 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 Nexstar Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Live Nation and Nexstar Media.
Diversification Opportunities for Live Nation and Nexstar Media
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Live and Nexstar is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Nexstar Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexstar Media Group 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 Nexstar Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexstar Media Group has no effect on the direction of Live Nation i.e., Live Nation and Nexstar Media go up and down completely randomly.
Pair Corralation between Live Nation and Nexstar Media
Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.91 times more return on investment than Nexstar Media. However, Live Nation Entertainment is 1.1 times less risky than Nexstar Media. It trades about 0.07 of its potential returns per unit of risk. Nexstar Media Group is currently generating about -0.01 per unit of risk. If you would invest 7,332 in Live Nation Entertainment on October 24, 2024 and sell it today you would earn a total of 5,908 from holding Live Nation Entertainment or generate 80.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.8% |
Values | Daily Returns |
Live Nation Entertainment vs. Nexstar Media Group
Performance |
Timeline |
Live Nation Entertainment |
Nexstar Media Group |
Live Nation and Nexstar Media Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Live Nation and Nexstar Media
The main advantage of trading using opposite Live Nation and Nexstar Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Nexstar Media 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 Nexstar Media will offset losses from the drop in Nexstar Media's long position.Live Nation vs. Perseus Mining Limited | Live Nation vs. MCEWEN MINING INC | Live Nation vs. GRIFFIN MINING LTD | Live Nation vs. CAL MAINE FOODS |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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