Correlation Between Imax Corp and Live Nation

Can any of the company-specific risk be diversified away by investing in both Imax 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 Imax 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 Imax Corp and Live Nation Entertainment, you can compare the effects of market volatilities on Imax 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 Imax Corp with a short position of Live Nation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Imax Corp and Live Nation.

Diversification Opportunities for Imax Corp and Live Nation

0.33

Correlation Coefficient

Imax Corp  Live Nation

Weak diversification

The 3 months correlation between Imax and Live is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Imax 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 Imax 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 Imax 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 Imax Corp i.e., Imax Corp and Live Nation go up and down completely randomly.

Pair Corralation between Imax Corp and Live Nation

Given the investment horizon of 90 days Imax Corp is expected to generate 0.75 times more return on investment than Live Nation. However, Imax Corp is 1.34 times less risky than Live Nation. It trades about 0.1 of its potential returns per unit of risk. Live Nation Entertainment is currently generating about -0.12 per unit of risk. If you would invest  1,621  in Imax Corp on February 6, 2024 and sell it today you would earn a total of  60.00  from holding Imax Corp or generate 3.7% return on investment over 90 days.

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

Imax Corp  vs.  Live Nation Entertainment

Imax Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Imax Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Imax Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Live Nation Entertainment

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Live Nation Entertainment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Live Nation may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Imax Corp and Live Nation

The main advantage of trading using opposite Imax Corp and Live Nation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Imax 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 Imax 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.

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 the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.