Correlation Between SLR Investment and Live Nation

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

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

Diversification Opportunities for SLR Investment and Live Nation

0.59

Correlation Coefficient

SLR Investment  Live Nation

Very weak diversification

The 3 months correlation between SLR and Live is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SLR Investment Corp and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and SLR Investment 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 SLR Investment Corp 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 Entertainment has no effect on the direction of SLR Investment i.e., SLR Investment and Live Nation go up and down completely randomly.

Pair Corralation between SLR Investment and Live Nation

Assuming the 90 days horizon SLR Investment Corp is expected to generate 0.58 times more return on investment than Live Nation. However, SLR Investment Corp is 1.73 times less risky than Live Nation. It trades about 0.04 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.06 per unit of risk. If you would invest  1,534  in SLR Investment Corp on December 27, 2024 and sell it today you would earn a total of  38.00  from holding SLR Investment Corp or generate 2.48% return on investment over 90 days.

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

SLR Investment Corp  vs.  Live Nation Entertainment

SLR Investment Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SLR Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Live Nation Entertainment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Live Nation Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with SLR Investment and Live Nation

The main advantage of trading using opposite SLR Investment and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SLR Investment 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 SLR Investment Corp 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.