Correlation Between Live Nation and G III

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

Diversification Opportunities for Live Nation and G III

-0.62

Correlation Coefficient

Live Nation  G III

Excellent diversification

The 3 months correlation between Live and GI4 is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and G III Apparel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G III Apparel 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 G III. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G III Apparel has no effect on the direction of Live Nation i.e., Live Nation and G III go up and down completely randomly.

Pair Corralation between Live Nation and G III

Assuming the 90 days horizon Live Nation Entertainment is expected to generate 0.6 times more return on investment than G III. However, Live Nation Entertainment is 1.67 times less risky than G III. It trades about 0.17 of its potential returns per unit of risk. G III Apparel Group is currently generating about -0.27 per unit of risk. If you would invest  12,550  in Live Nation Entertainment on December 5, 2024 and sell it today you would earn a total of  1,175  from holding Live Nation Entertainment or generate 9.36% return on investment over 90 days.

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

Live Nation Entertainment  vs.  G III Apparel Group

Live Nation Entertainment

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Live Nation may actually be approaching a critical reversion point that can send shares even higher in April 2025.

G III Apparel

Risk-Adjusted Performance

Very Weak

Over the last 90 days G III Apparel Group 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Live Nation and G III

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

The idea behind Live Nation Entertainment and G III Apparel Group 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.