Correlation Between Live Nation and CuriosityStream

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

Diversification Opportunities for Live Nation and CuriosityStream

0.43

Correlation Coefficient

Live Nation  CuriosityStream

Very weak diversification

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

Pair Corralation between Live Nation and CuriosityStream

Considering the 90-day investment horizon Live Nation is expected to generate 32.28 times less return on investment than CuriosityStream. But when comparing it to its historical volatility, Live Nation Entertainment is 89.86 times less risky than CuriosityStream. It trades about 0.37 of its potential returns per unit of risk. CuriosityStream is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2.80  in CuriosityStream on August 30, 2024 and sell it today you would earn a total of  0.55  from holding CuriosityStream or generate 19.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	85.94%
Values	Daily Returns

Live Nation Entertainment  vs.  CuriosityStream

Live Nation Entertainment

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 29 (%) 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.

CuriosityStream

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CuriosityStream are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain forward indicators, CuriosityStream showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Nation and CuriosityStream

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

The idea behind Live Nation Entertainment and CuriosityStream 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.