Correlation Between Live Nation and World Wrestling

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

Diversification Opportunities for Live Nation and World Wrestling

0.21

Correlation Coefficient

Live Nation  World Wrestling

Modest diversification

The 3 months correlation between Live and World is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and World Wrestling Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Wrestling Ente 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 World Wrestling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Wrestling Ente has no effect on the direction of Live Nation i.e., Live Nation and World Wrestling go up and down completely randomly.

Pair Corralation between Live Nation and World Wrestling

If you would invest  9,885  in Live Nation Entertainment on September 13, 2024 and sell it today you would earn a total of  3,583  from holding Live Nation Entertainment or generate 36.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Live Nation Entertainment  vs.  World Wrestling Entertainment

Live Nation Entertainment

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 26 (%) 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.

World Wrestling Ente

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days World Wrestling Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, World Wrestling is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Live Nation and World Wrestling

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

The idea behind Live Nation Entertainment and World Wrestling Entertainment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.