Correlation Between Live Nation and IA Financial

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

Diversification Opportunities for Live Nation and IA Financial

0.57

Correlation Coefficient

Live Nation  IA Financial

Very weak diversification

The 3 months correlation between Live and IAFNF is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and iA Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iA Financial 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 IA Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iA Financial has no effect on the direction of Live Nation i.e., Live Nation and IA Financial go up and down completely randomly.

Pair Corralation between Live Nation and IA Financial

Considering the 90-day investment horizon Live Nation Entertainment is expected to generate 1.23 times more return on investment than IA Financial. However, Live Nation is 1.23 times more volatile than iA Financial. It trades about -0.01 of its potential returns per unit of risk. iA Financial is currently generating about -0.02 per unit of risk. If you would invest  13,185  in Live Nation Entertainment on December 27, 2024 and sell it today you would lose (377.00) from holding Live Nation Entertainment or give up 2.86% of portfolio value over 90 days.

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

Live Nation Entertainment  vs.  iA Financial

Live Nation Entertainment

Risk-Adjusted Performance

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 latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

iA Financial

Risk-Adjusted Performance

Very Weak

Over the last 90 days iA Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IA Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Live Nation and IA Financial

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

The idea behind Live Nation Entertainment and iA Financial 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.