Correlation Between Live Nation and Endeavor Group

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

Diversification Opportunities for Live Nation and Endeavor Group

0.41

Correlation Coefficient

Live Nation  Endeavor Group

Very weak diversification

The 3 months correlation between Live and Endeavor is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Endeavor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Endeavor Group Holdings 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 Endeavor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Endeavor Group Holdings has no effect on the direction of Live Nation i.e., Live Nation and Endeavor Group go up and down completely randomly.

Pair Corralation between Live Nation and Endeavor Group

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 0.57 times more return on investment than Endeavor Group. However, Live Nation Entertainment is 1.74 times less risky than Endeavor Group. It trades about 0.08 of its potential returns per unit of risk. Endeavor Group Holdings is currently generating about -0.02 per unit of risk. If you would invest  14,013  in Live Nation Entertainment on November 28, 2024 and sell it today you would earn a total of  433.00  from holding Live Nation Entertainment or generate 3.09% return on investment over 90 days.

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

Live Nation Entertainment  vs.  Endeavor Group Holdings

Live Nation Entertainment

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Live Nation is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Endeavor Group Holdings

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Endeavor Group Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Endeavor Group is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Live Nation and Endeavor Group

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

The idea behind Live Nation Entertainment and Endeavor Group Holdings 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.