Correlation Between Live Nation and Fox Corp

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

Diversification Opportunities for Live Nation and Fox Corp

0.8

Correlation Coefficient

Live Nation  Fox Corp

Very poor diversification

The 3 months correlation between Live and Fox is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Fox Corp Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fox Corp Class 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 Fox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fox Corp Class has no effect on the direction of Live Nation i.e., Live Nation and Fox Corp go up and down completely randomly.

Pair Corralation between Live Nation and Fox Corp

Considering the 90-day investment horizon Live Nation is expected to generate 1.0 times less return on investment than Fox Corp. In addition to that, Live Nation is 1.17 times more volatile than Fox Corp Class. It trades about 0.19 of its total potential returns per unit of risk. Fox Corp Class is currently generating about 0.23 per unit of volatility. If you would invest  3,835  in Fox Corp Class on October 25, 2024 and sell it today you would earn a total of  743.00  from holding Fox Corp Class or generate 19.37% return on investment over 90 days.

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

Live Nation Entertainment  vs.  Fox Corp Class

Live Nation Entertainment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, Live Nation showed solid returns over the last few months and may actually be approaching a breakup point.

Fox Corp Class

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fox Corp Class are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Fox Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Nation and Fox Corp

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

The idea behind Live Nation Entertainment and Fox Corp Class 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.