Correlation Between Live Nation and International Business

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

Diversification Opportunities for Live Nation and International Business

-0.55
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Live Nation and International is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Live Nation Entertainment and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Live Nation i.e., Live Nation and International Business go up and down completely randomly.

Pair Corralation between Live Nation and International Business

Considering the 90-day investment horizon Live Nation is expected to generate 2.38 times less return on investment than International Business. In addition to that, Live Nation is 1.84 times more volatile than International Business Machines. It trades about 0.01 of its total potential returns per unit of risk. International Business Machines is currently generating about 0.05 per unit of volatility. If you would invest  10,914  in International Business Machines on September 9, 2022 and sell it today you would earn a total of  3,921  from holding International Business Machines or generate 35.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Live Nation Entertainment  vs.  International Business Machine

 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 unfluctuating 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

International Business 
International Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Business Machines are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady fundamental drivers, International Business revealed solid returns over the last few months and may actually be approaching a breakup point.

International Price Channel

Live Nation and International Business Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Live Nation and International Business

The main advantage of trading using opposite Live Nation and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Live Nation position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.
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The idea behind Live Nation Entertainment and International Business Machines 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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