Correlation Between Rai Way and Live Nation

Can any of the company-specific risk be diversified away by investing in both Rai Way and Live Nation 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 Rai Way and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rai Way SpA and Live Nation Entertainment, you can compare the effects of market volatilities on Rai Way and Live Nation 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 Rai Way with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rai Way and Live Nation.

Diversification Opportunities for Rai Way and Live Nation

0.02

Correlation Coefficient

Rai Way  Live Nation

Significant diversification

The 3 months correlation between Rai and Live is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rai Way SpA and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and Rai Way 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 Rai Way SpA are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Rai Way i.e., Rai Way and Live Nation go up and down completely randomly.

Pair Corralation between Rai Way and Live Nation

Assuming the 90 days horizon Rai Way SpA is expected to generate 1.01 times more return on investment than Live Nation. However, Rai Way is 1.01 times more volatile than Live Nation Entertainment. It trades about 0.08 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.06 per unit of risk. If you would invest  525.00  in Rai Way SpA on December 27, 2024 and sell it today you would earn a total of  44.00  from holding Rai Way SpA or generate 8.38% return on investment over 90 days.

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

Rai Way SpA  vs.  Live Nation Entertainment

Rai Way SpA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rai Way SpA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Rai Way may actually be approaching a critical reversion point that can send shares even higher in April 2025.

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 latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Rai Way and Live Nation

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

The idea behind Rai Way SpA and Live Nation 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.