Correlation Between Live Nation and Motorola Solutions

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

Diversification Opportunities for Live Nation and Motorola Solutions

0.51

Correlation Coefficient

Live Nation  Motorola Solutions

Very weak diversification

The 3 months correlation between Live and Motorola is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment, and Motorola Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Motorola Solutions 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 Motorola Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Motorola Solutions has no effect on the direction of Live Nation i.e., Live Nation and Motorola Solutions go up and down completely randomly.

Pair Corralation between Live Nation and Motorola Solutions

Assuming the 90 days trading horizon Live Nation Entertainment, is expected to generate 1.4 times more return on investment than Motorola Solutions. However, Live Nation is 1.4 times more volatile than Motorola Solutions. It trades about -0.08 of its potential returns per unit of risk. Motorola Solutions is currently generating about -0.18 per unit of risk. If you would invest  16,429  in Live Nation Entertainment, on December 25, 2024 and sell it today you would lose (1,759) from holding Live Nation Entertainment, or give up 10.71% of portfolio value over 90 days.

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

Live Nation Entertainment,  vs.  Motorola Solutions

Live Nation Entertai

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 weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Motorola Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Motorola Solutions 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 somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Live Nation and Motorola Solutions

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

The idea behind Live Nation Entertainment, and Motorola Solutions 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 Commodity Directory module to find actively traded commodities issued by global exchanges.