Correlation Between Live Nation and Hanover House

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

Diversification Opportunities for Live Nation and Hanover House

0.65

Correlation Coefficient

Live Nation  Hanover House

Poor diversification

The 3 months correlation between Live and Hanover is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Hanover House in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanover House 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 Hanover House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanover House has no effect on the direction of Live Nation i.e., Live Nation and Hanover House go up and down completely randomly.

Pair Corralation between Live Nation and Hanover House

Considering the 90-day investment horizon Live Nation Entertainment is expected to under-perform the Hanover House. But the stock apears to be less risky and, when comparing its historical volatility, Live Nation Entertainment is 9.9 times less risky than Hanover House. The stock trades about -0.08 of its potential returns per unit of risk. The Hanover House is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  0.68  in Hanover House on September 21, 2024 and sell it today you would earn a total of  0.32  from holding Hanover House or generate 47.06% return on investment over 90 days.

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

Live Nation Entertainment  vs.  Hanover House

Live Nation Entertainment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 19 (%) 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.

Hanover House

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hanover House are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Hanover House exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Live Nation and Hanover House

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

The idea behind Live Nation Entertainment and Hanover House 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.