Correlation Between Live Nation and Madison Square

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

Diversification Opportunities for Live Nation and Madison Square

0.53

Correlation Coefficient

Live Nation  Madison Square

Very weak diversification

The 3 months correlation between Live and Madison is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Madison Square Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Square Garden 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 Madison Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Square Garden has no effect on the direction of Live Nation i.e., Live Nation and Madison Square go up and down completely randomly.

Pair Corralation between Live Nation and Madison Square

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 1.28 times more return on investment than Madison Square. However, Live Nation is 1.28 times more volatile than Madison Square Garden. It trades about 0.08 of its potential returns per unit of risk. Madison Square Garden is currently generating about -0.15 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.  Madison Square Garden

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.

Madison Square Garden

Risk-Adjusted Performance

Very Weak

Over the last 90 days Madison Square Garden has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Madison Square is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Live Nation and Madison Square

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

The idea behind Live Nation Entertainment and Madison Square Garden 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.