Correlation Between Live Nation and News Corp

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

Diversification Opportunities for Live Nation and News Corp

0.43

Correlation Coefficient

Live Nation  News Corp

Very weak diversification

The 3 months correlation between Live and News is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and News Corp B in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on News Corp B 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 News Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of News Corp B has no effect on the direction of Live Nation i.e., Live Nation and News Corp go up and down completely randomly.

Pair Corralation between Live Nation and News Corp

Considering the 90-day investment horizon Live Nation Entertainment is expected to under-perform the News Corp. In addition to that, Live Nation is 2.22 times more volatile than News Corp B. It trades about -0.12 of its total potential returns per unit of risk. News Corp B is currently generating about -0.19 per unit of volatility. If you would invest  2,652  in News Corp B on February 6, 2024 and sell it today you would lose (125.00) from holding News Corp B or give up 4.71% of portfolio value over 90 days.

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

Live Nation Entertainment  vs.  News Corp B

Live Nation Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Live Nation may actually be approaching a critical reversion point that can send shares even higher in June 2024.

News Corp B

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days News Corp B has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, News Corp is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Live Nation and News Corp

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

The idea behind Live Nation Entertainment and News Corp B 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.