Correlation Between Live Nation and Performance Food

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

Diversification Opportunities for Live Nation and Performance Food

0.9
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Live and Performance is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Performance Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Performance Food 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 Performance Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Performance Food has no effect on the direction of Live Nation i.e., Live Nation and Performance Food go up and down completely randomly.

Pair Corralation between Live Nation and Performance Food

Assuming the 90 days horizon Live Nation Entertainment is expected to generate 1.62 times more return on investment than Performance Food. However, Live Nation is 1.62 times more volatile than Performance Food Group. It trades about 0.18 of its potential returns per unit of risk. Performance Food Group is currently generating about 0.16 per unit of risk. If you would invest  10,625  in Live Nation Entertainment on October 23, 2024 and sell it today you would earn a total of  2,465  from holding Live Nation Entertainment or generate 23.2% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Live Nation Entertainment  vs.  Performance Food Group

 Performance 
       Timeline  
Live Nation Entertainment 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 14 (%) 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.
Performance Food 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Performance Food Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Performance Food may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Live Nation and Performance Food Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Live Nation and Performance Food

The main advantage of trading using opposite Live Nation and Performance Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Performance Food 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 Performance Food will offset losses from the drop in Performance Food's long position.
The idea behind Live Nation Entertainment and Performance Food Group 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.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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