Correlation Between Universal Music and UNIQA Insurance
Can any of the company-specific risk be diversified away by investing in both Universal Music and UNIQA Insurance 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 Universal Music and UNIQA Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and UNIQA Insurance Group, you can compare the effects of market volatilities on Universal Music and UNIQA Insurance 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 Universal Music with a short position of UNIQA Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and UNIQA Insurance.
Diversification Opportunities for Universal Music and UNIQA Insurance
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and UNIQA is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and UNIQA Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIQA Insurance Group and Universal Music 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 Universal Music Group are associated (or correlated) with UNIQA Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIQA Insurance Group has no effect on the direction of Universal Music i.e., Universal Music and UNIQA Insurance go up and down completely randomly.
Pair Corralation between Universal Music and UNIQA Insurance
Assuming the 90 days trading horizon Universal Music is expected to generate 1.29 times less return on investment than UNIQA Insurance. In addition to that, Universal Music is 2.72 times more volatile than UNIQA Insurance Group. It trades about 0.01 of its total potential returns per unit of risk. UNIQA Insurance Group is currently generating about 0.05 per unit of volatility. If you would invest 605.00 in UNIQA Insurance Group on September 3, 2024 and sell it today you would earn a total of 115.00 from holding UNIQA Insurance Group or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.42% |
| Values | Daily Returns |
Universal Music Group vs. UNIQA Insurance Group
Performance |
| Timeline |
| Universal Music Group |
| UNIQA Insurance Group |
Universal Music and UNIQA Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and UNIQA Insurance
The main advantage of trading using opposite Universal Music and UNIQA Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, UNIQA Insurance 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 UNIQA Insurance will offset losses from the drop in UNIQA Insurance's long position.| Universal Music vs. Catalyst Media Group | Universal Music vs. CATLIN GROUP | Universal Music vs. RTW Venture Fund | Universal Music vs. Secure Property Development |
| UNIQA Insurance vs. Panther Metals PLC | UNIQA Insurance vs. McEwen Mining | UNIQA Insurance vs. Molson Coors Beverage | UNIQA Insurance vs. Central Asia Metals |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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