Correlation Between Live Nation and Paramount Global

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

Diversification Opportunities for Live Nation and Paramount Global

0.64

Correlation Coefficient

Live Nation  Paramount Global

Poor diversification

The 3 months correlation between Live and Paramount is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Paramount Global Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paramount Global Class 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 Paramount Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paramount Global Class has no effect on the direction of Live Nation i.e., Live Nation and Paramount Global go up and down completely randomly.

Pair Corralation between Live Nation and Paramount Global

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 1.38 times more return on investment than Paramount Global. However, Live Nation is 1.38 times more volatile than Paramount Global Class. It trades about 0.4 of its potential returns per unit of risk. Paramount Global Class is currently generating about 0.05 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Live Nation Entertainment  vs.  Paramount Global Class

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.

Paramount Global Class

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Paramount Global Class are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Paramount Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Live Nation and Paramount Global

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

The idea behind Live Nation Entertainment and Paramount Global Class 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.