Correlation Between Universal Music and JLEN Environmental
Can any of the company-specific risk be diversified away by investing in both Universal Music and JLEN Environmental 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 JLEN Environmental 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 JLEN Environmental Assets, you can compare the effects of market volatilities on Universal Music and JLEN Environmental 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 JLEN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and JLEN Environmental.
Diversification Opportunities for Universal Music and JLEN Environmental
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and JLEN is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and JLEN Environmental Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JLEN Environmental Assets 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 JLEN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JLEN Environmental Assets has no effect on the direction of Universal Music i.e., Universal Music and JLEN Environmental go up and down completely randomly.
Pair Corralation between Universal Music and JLEN Environmental
Assuming the 90 days trading horizon Universal Music Group is expected to generate 0.68 times more return on investment than JLEN Environmental. However, Universal Music Group is 1.48 times less risky than JLEN Environmental. It trades about 0.31 of its potential returns per unit of risk. JLEN Environmental Assets is currently generating about -0.21 per unit of risk. If you would invest 2,289 in Universal Music Group on September 18, 2024 and sell it today you would earn a total of 142.00 from holding Universal Music Group or generate 6.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. JLEN Environmental Assets
Performance |
| Timeline |
| Universal Music Group |
| JLEN Environmental Assets |
Universal Music and JLEN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and JLEN Environmental
The main advantage of trading using opposite Universal Music and JLEN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, JLEN Environmental 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 JLEN Environmental will offset losses from the drop in JLEN Environmental's long position.| Universal Music vs. Samsung Electronics Co | Universal Music vs. Samsung Electronics Co | Universal Music vs. Hyundai Motor | Universal Music vs. Reliance Industries Ltd |
| JLEN Environmental vs. Universal Music Group | JLEN Environmental vs. Charter Communications Cl | JLEN Environmental vs. Livermore Investments Group | JLEN Environmental vs. Kinnevik Investment AB |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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