Correlation Between Live Nation and Disney

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

Diversification Opportunities for Live Nation and Disney

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Live Nation and Disney is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Walt Disney in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Walt Disney 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 Disney. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Walt Disney has no effect on the direction of Live Nation i.e., Live Nation and Disney go up and down completely randomly.

Pair Corralation between Live Nation and Disney

Considering the 90-day investment horizon Live Nation Entertainment is expected to under-perform the Disney. But the stock apears to be less risky and, when comparing its historical volatility, Live Nation Entertainment is 1.05 times less risky than Disney. The stock trades about -0.11 of its potential returns per unit of risk. The Walt Disney is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  11,253  in Walt Disney on September 1, 2022 and sell it today you would lose (1,466)  from holding Walt Disney or give up 13.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Live Nation Entertainment  vs.  Walt Disney

 Performance (%) 
       Timeline  
Live Nation Entertainment 
Live Nation Performance
0 of 100
Over the last 90 days Live Nation Entertainment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2022. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Live Nation Price Channel

Walt Disney 
Disney Performance
0 of 100
Over the last 90 days Walt Disney has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's forward indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Disney Price Channel

Live Nation and Disney Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Live Nation and Disney

The main advantage of trading using opposite Live Nation and Disney positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Disney 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 Disney will offset losses from the drop in Disney's long position.
Live Nation vs. Walt Disney
Live Nation vs. Netflix
Live Nation vs. Charles Schwab Corp
Live Nation vs. McDonalds
The idea behind Live Nation Entertainment and Walt Disney 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.
Disney vs. Netflix
Disney vs. Charles Schwab Corp
Disney vs. McDonalds
Disney vs. International Business Machines
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 Analyst Recommendations module to analyst recommendations and target price estimates broken down by several categories.

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