Correlation Between Hecla Mining and Universal Music
Can any of the company-specific risk be diversified away by investing in both Hecla Mining 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 Hecla Mining and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hecla Mining Co and Universal Music Group, you can compare the effects of market volatilities on Hecla Mining 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 Hecla Mining with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hecla Mining and Universal Music.
Diversification Opportunities for Hecla Mining and Universal Music
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hecla and Universal is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hecla Mining Co 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 Hecla Mining 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 Hecla Mining Co 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 Hecla Mining i.e., Hecla Mining and Universal Music go up and down completely randomly.
Pair Corralation between Hecla Mining and Universal Music
Assuming the 90 days trading horizon Hecla Mining is expected to generate 1.22 times less return on investment than Universal Music. In addition to that, Hecla Mining is 1.08 times more volatile than Universal Music Group. It trades about 0.04 of its total potential returns per unit of risk. Universal Music Group is currently generating about 0.06 per unit of volatility. If you would invest 2,347 in Universal Music Group on November 2, 2024 and sell it today you would earn a total of 339.00 from holding Universal Music Group or generate 14.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Hecla Mining Co vs. Universal Music Group
Performance |
| Timeline |
| Hecla Mining |
| Universal Music Group |
Hecla Mining and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hecla Mining and Universal Music
The main advantage of trading using opposite Hecla Mining and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hecla Mining 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.| Hecla Mining vs. Adriatic Metals | Hecla Mining vs. Spirent Communications plc | Hecla Mining vs. Rheinmetall AG | Hecla Mining vs. Cornish Metals |
| Universal Music vs. Travel Leisure Co | Universal Music vs. DFS Furniture PLC | Universal Music vs. Solstad Offshore ASA | Universal Music vs. Molson Coors Beverage |
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.
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