Correlation Between Live Nation and Healthcare Realty

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

Diversification Opportunities for Live Nation and Healthcare Realty

0.82

Correlation Coefficient

Live Nation  Healthcare Realty

Very poor diversification

The 3 months correlation between Live and Healthcare is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment, and Healthcare Realty Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthcare Realty Trust 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 Healthcare Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthcare Realty Trust has no effect on the direction of Live Nation i.e., Live Nation and Healthcare Realty go up and down completely randomly.

Pair Corralation between Live Nation and Healthcare Realty

Assuming the 90 days trading horizon Live Nation Entertainment, is expected to generate 0.94 times more return on investment than Healthcare Realty. However, Live Nation Entertainment, is 1.06 times less risky than Healthcare Realty. It trades about 0.21 of its potential returns per unit of risk. Healthcare Realty Trust is currently generating about 0.04 per unit of risk. If you would invest  13,130  in Live Nation Entertainment, on October 23, 2024 and sell it today you would earn a total of  3,230  from holding Live Nation Entertainment, or generate 24.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	91.38%
Values	Daily Returns

Live Nation Entertainment,  vs.  Healthcare Realty Trust

Live Nation Entertai

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment, are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Live Nation sustained solid returns over the last few months and may actually be approaching a breakup point.

Healthcare Realty Trust

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Healthcare Realty Trust has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Healthcare Realty is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Live Nation and Healthcare Realty

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

The idea behind Live Nation Entertainment, and Healthcare Realty Trust 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.