Correlation Between Live Nation and John Wiley

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

Diversification Opportunities for Live Nation and John Wiley

0.37

Correlation Coefficient

Live Nation  John Wiley

Weak diversification

The 3 months correlation between Live and John is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and John Wiley Sons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Wiley Sons 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 John Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Wiley Sons has no effect on the direction of Live Nation i.e., Live Nation and John Wiley go up and down completely randomly.

Pair Corralation between Live Nation and John Wiley

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 0.51 times more return on investment than John Wiley. However, Live Nation Entertainment is 1.96 times less risky than John Wiley. It trades about -0.2 of its potential returns per unit of risk. John Wiley Sons is currently generating about -0.56 per unit of risk. If you would invest  14,029  in Live Nation Entertainment on September 23, 2024 and sell it today you would lose (701.00) from holding Live Nation Entertainment or give up 5.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	61.9%
Values	Daily Returns

Live Nation Entertainment  vs.  John Wiley Sons

Live Nation Entertainment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 19 (%) 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.

John Wiley Sons

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Live Nation and John Wiley

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

The idea behind Live Nation Entertainment and John Wiley Sons 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.