Correlation Between Live Nation and Celtic Plc

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

Diversification Opportunities for Live Nation and Celtic Plc

-0.75

Correlation Coefficient

Live Nation  Celtic Plc

Pay attention - limited upside

The 3 months correlation between Live and Celtic is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Celtic plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celtic plc 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 Celtic Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celtic plc has no effect on the direction of Live Nation i.e., Live Nation and Celtic Plc go up and down completely randomly.

Pair Corralation between Live Nation and Celtic Plc

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 0.4 times more return on investment than Celtic Plc. However, Live Nation Entertainment is 2.5 times less risky than Celtic Plc. It trades about 0.4 of its potential returns per unit of risk. Celtic plc is currently generating about -0.12 per unit of risk. If you would invest  9,534  in Live Nation Entertainment on September 2, 2024 and sell it today you would earn a total of  4,291  from holding Live Nation Entertainment or generate 45.01% return on investment over 90 days.

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

Live Nation Entertainment  vs.  Celtic plc

Live Nation Entertainment

Risk-Adjusted Performance

31 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 31 (%) 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.

Celtic plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celtic plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Live Nation and Celtic Plc

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

The idea behind Live Nation Entertainment and Celtic plc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.