Correlation Between Erste Group and Universal Music
Can any of the company-specific risk be diversified away by investing in both Erste Group 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 Erste Group and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erste Group Bank and Universal Music Group, you can compare the effects of market volatilities on Erste Group 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 Erste Group with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erste Group and Universal Music.
Diversification Opportunities for Erste Group and Universal Music
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Erste and Universal is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Erste Group Bank 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 Erste Group 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 Erste Group Bank 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 Erste Group i.e., Erste Group and Universal Music go up and down completely randomly.
Pair Corralation between Erste Group and Universal Music
Assuming the 90 days trading horizon Erste Group Bank is expected to generate 1.11 times more return on investment than Universal Music. However, Erste Group is 1.11 times more volatile than Universal Music Group. It trades about 0.15 of its potential returns per unit of risk. Universal Music Group is currently generating about 0.03 per unit of risk. If you would invest 5,338 in Erste Group Bank on September 12, 2024 and sell it today you would earn a total of 192.00 from holding Erste Group Bank or generate 3.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erste Group Bank vs. Universal Music Group
Performance |
| Timeline |
| Erste Group Bank |
| Universal Music Group |
Erste Group and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erste Group and Universal Music
The main advantage of trading using opposite Erste Group and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erste Group 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.| Erste Group vs. Hong Kong Land | Erste Group vs. Neometals | Erste Group vs. Coor Service Management | Erste Group vs. Fidelity Sustainable USD |
| Universal Music vs. Erste Group Bank | Universal Music vs. British American Tobacco | Universal Music vs. Virgin Wines UK | Universal Music vs. Cincinnati Financial Corp |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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