Correlation Between PENN Entertainment, and Live Nation

Can any of the company-specific risk be diversified away by investing in both PENN Entertainment, and Live Nation 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 PENN Entertainment, and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PENN Entertainment, and Live Nation Entertainment,, you can compare the effects of market volatilities on PENN Entertainment, and Live Nation 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 PENN Entertainment, with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of PENN Entertainment, and Live Nation.

Diversification Opportunities for PENN Entertainment, and Live Nation

0.94

Correlation Coefficient

PENN Entertainment,  Live Nation

Almost no diversification

The 3 months correlation between PENN and Live is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding PENN Entertainment, and Live Nation Entertainment, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertai and PENN Entertainment, 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 PENN Entertainment, are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertai has no effect on the direction of PENN Entertainment, i.e., PENN Entertainment, and Live Nation go up and down completely randomly.

Pair Corralation between PENN Entertainment, and Live Nation

Assuming the 90 days trading horizon PENN Entertainment, is expected to generate 1.83 times less return on investment than Live Nation. But when comparing it to its historical volatility, PENN Entertainment, is 1.19 times less risky than Live Nation. It trades about 0.16 of its potential returns per unit of risk. Live Nation Entertainment, is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  12,178  in Live Nation Entertainment, on October 5, 2024 and sell it today you would earn a total of  3,534  from holding Live Nation Entertainment, or generate 29.02% return on investment over 90 days.

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

PENN Entertainment,  vs.  Live Nation Entertainment,

PENN Entertainment,

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PENN Entertainment, are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, PENN Entertainment, sustained solid returns over the last few months and may actually be approaching a breakup point.

Live Nation Entertai

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. Despite somewhat weak basic indicators, Live Nation sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PENN Entertainment, and Live Nation

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

The idea behind PENN Entertainment, and Live Nation Entertainment, 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.