Correlation Between Live Nation and Sirius XM

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

Diversification Opportunities for Live Nation and Sirius XM

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Live Nation and Sirius is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and Sirius XM Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sirius XM Holding 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 Sirius XM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sirius XM Holding has no effect on the direction of Live Nation i.e., Live Nation and Sirius XM go up and down completely randomly.

Pair Corralation between Live Nation and Sirius XM

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 2.4 times more return on investment than Sirius XM. However, Live Nation is 2.4 times more volatile than Sirius XM Holding. It trades about 0.03 of its potential returns per unit of risk. Sirius XM Holding is currently generating about -0.04 per unit of risk. If you would invest  7,326  in Live Nation Entertainment on September 7, 2022 and sell it today you would earn a total of  62.00  from holding Live Nation Entertainment or generate 0.85% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Live Nation Entertainment  vs.  Sirius XM Holding

 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 uncertain performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2023. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Live Nation Price Channel

Sirius XM Holding 
Sirius Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Sirius XM Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Sirius XM is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Sirius Price Channel

Live Nation and Sirius XM Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Live Nation and Sirius XM

The main advantage of trading using opposite Live Nation and Sirius XM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, Sirius XM 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 Sirius XM will offset losses from the drop in Sirius XM's long position.
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The idea behind Live Nation Entertainment and Sirius XM Holding 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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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 Stock Screener module to find equities using custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..

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