Correlation Between Comcast Corp and Live Nation

Can any of the company-specific risk be diversified away by investing in both Comcast Corp and Live Nation 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 Comcast Corp and Live Nation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Comcast Corp and Live Nation Entertainment, you can compare the effects of market volatilities on Comcast Corp and Live Nation 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 Comcast Corp with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Comcast Corp and Live Nation.

Diversification Opportunities for Comcast Corp and Live Nation

-0.25

Correlation Coefficient

Comcast Corp  Live Nation

Very good diversification

The 3 months correlation between Comcast and Live is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Comcast Corp and Live Nation Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Live Nation Entertainment and Comcast Corp 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 Comcast Corp are associated (or correlated) with Live Nation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Live Nation Entertainment has no effect on the direction of Comcast Corp i.e., Comcast Corp and Live Nation go up and down completely randomly.

Pair Corralation between Comcast Corp and Live Nation

Assuming the 90 days horizon Comcast Corp is expected to generate 0.54 times more return on investment than Live Nation. However, Comcast Corp is 1.84 times less risky than Live Nation. It trades about -0.21 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.38 per unit of risk. If you would invest  4,233  in Comcast Corp on January 25, 2024 and sell it today you would lose (212.00) from holding Comcast Corp or give up 5.01% of portfolio value over 90 days.

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

Comcast Corp  vs.  Live Nation Entertainment

Comcast Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Comcast Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Live Nation Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

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 fairly stable basic indicators, Live Nation is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Comcast Corp and Live Nation

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

The idea behind Comcast Corp and Live Nation 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.