Correlation Between Live Nation and Trade Desk

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

Diversification Opportunities for Live Nation and Trade Desk

0.13

Correlation Coefficient

Live Nation  Trade Desk

Average diversification

The 3 months correlation between Live and Trade is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and The Trade Desk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Trade Desk 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 Trade Desk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Trade Desk has no effect on the direction of Live Nation i.e., Live Nation and Trade Desk go up and down completely randomly.

Pair Corralation between Live Nation and Trade Desk

Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.36 times more return on investment than Trade Desk. However, Live Nation Entertainment is 2.74 times less risky than Trade Desk. It trades about -0.15 of its potential returns per unit of risk. The Trade Desk is currently generating about -0.25 per unit of risk. If you would invest  12,665  in Live Nation Entertainment on December 20, 2024 and sell it today you would lose (1,950) from holding Live Nation Entertainment or give up 15.4% of portfolio value over 90 days.

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

Live Nation Entertainment  vs.  The Trade Desk

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.

Trade Desk

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Trade Desk has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Live Nation and Trade Desk

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

The idea behind Live Nation Entertainment and The Trade Desk 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.