Correlation Between Live Nation and PENN Entertainment

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

Diversification Opportunities for Live Nation and PENN Entertainment

0.88

Correlation Coefficient

Live Nation  PENN Entertainment

Very poor diversification

The 3 months correlation between Live and PENN is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and PENN Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PENN Entertainment 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 PENN Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PENN Entertainment has no effect on the direction of Live Nation i.e., Live Nation and PENN Entertainment go up and down completely randomly.

Pair Corralation between Live Nation and PENN Entertainment

Assuming the 90 days horizon Live Nation Entertainment is expected to under-perform the PENN Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, Live Nation Entertainment is 1.56 times less risky than PENN Entertainment. The stock trades about -0.15 of its potential returns per unit of risk. The PENN Entertainment is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  1,714  in PENN Entertainment on December 20, 2024 and sell it today you would lose (222.00) from holding PENN Entertainment or give up 12.95% of portfolio value over 90 days.

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

Live Nation Entertainment  vs.  PENN Entertainment

Live Nation Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Nation Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

PENN Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days PENN Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators 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 PENN Entertainment

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

The idea behind Live Nation Entertainment and PENN Entertainment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.