Correlation Between Solstad Offshore and Universal Music
Can any of the company-specific risk be diversified away by investing in both Solstad Offshore and Universal Music 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 Solstad Offshore and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solstad Offshore ASA and Universal Music Group, you can compare the effects of market volatilities on Solstad Offshore and Universal Music 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 Solstad Offshore with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solstad Offshore and Universal Music.
Diversification Opportunities for Solstad Offshore and Universal Music
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solstad and Universal is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Solstad Offshore ASA and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group and Solstad Offshore 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 Solstad Offshore ASA are associated (or correlated) with Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Solstad Offshore i.e., Solstad Offshore and Universal Music go up and down completely randomly.
Pair Corralation between Solstad Offshore and Universal Music
Assuming the 90 days trading horizon Solstad Offshore ASA is expected to generate 3.15 times more return on investment than Universal Music. However, Solstad Offshore is 3.15 times more volatile than Universal Music Group. It trades about 0.09 of its potential returns per unit of risk. Universal Music Group is currently generating about 0.05 per unit of risk. If you would invest 3,312 in Solstad Offshore ASA on September 12, 2024 and sell it today you would earn a total of 610.00 from holding Solstad Offshore ASA or generate 18.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solstad Offshore ASA vs. Universal Music Group
Performance |
| Timeline |
| Solstad Offshore ASA |
| Universal Music Group |
Solstad Offshore and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solstad Offshore and Universal Music
The main advantage of trading using opposite Solstad Offshore and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solstad Offshore position performs unexpectedly, Universal Music 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 Universal Music will offset losses from the drop in Universal Music's long position.| Solstad Offshore vs. Take Two Interactive Software | Solstad Offshore vs. METALL ZUG AG | Solstad Offshore vs. Ross Stores | Solstad Offshore vs. Pfeiffer Vacuum Technology |
| Universal Music vs. Hochschild Mining plc | Universal Music vs. Sparebank 1 SR | Universal Music vs. Prudential Financial | Universal Music vs. McEwen Mining |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |