Correlation Between Live Nation and Aurora Investment

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

Diversification Opportunities for Live Nation and Aurora Investment

-0.88

Correlation Coefficient

Live Nation  Aurora Investment

Pay attention - limited upside

The 3 months correlation between Live and Aurora is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Aurora Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurora Investment Trust 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 Aurora Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurora Investment Trust has no effect on the direction of Live Nation i.e., Live Nation and Aurora Investment go up and down completely randomly.

Pair Corralation between Live Nation and Aurora Investment

Assuming the 90 days trading horizon Live Nation Entertainment is expected to generate 1.69 times more return on investment than Aurora Investment. However, Live Nation is 1.69 times more volatile than Aurora Investment Trust. It trades about 0.07 of its potential returns per unit of risk. Aurora Investment Trust is currently generating about 0.03 per unit of risk. If you would invest  7,416  in Live Nation Entertainment on September 4, 2024 and sell it today you would earn a total of  6,137  from holding Live Nation Entertainment or generate 82.75% return on investment over 90 days.

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

Live Nation Entertainment  vs.  Aurora Investment Trust

Live Nation Entertainment

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Live Nation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Aurora Investment Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aurora Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Live Nation and Aurora Investment

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

The idea behind Live Nation Entertainment and Aurora Investment Trust 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.