Correlation Between UNIVERSAL MUSIC and WUXI BIOLOGICS
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and WUXI BIOLOGICS 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 WUXI BIOLOGICS 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 WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on UNIVERSAL MUSIC and WUXI BIOLOGICS 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 WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and WUXI BIOLOGICS.
Diversification Opportunities for UNIVERSAL MUSIC and WUXI BIOLOGICS
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between UNIVERSAL and WUXI is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 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 WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and WUXI BIOLOGICS go up and down completely randomly.
Pair Corralation between UNIVERSAL MUSIC and WUXI BIOLOGICS
Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to generate 0.39 times more return on investment than WUXI BIOLOGICS. However, UNIVERSAL MUSIC GROUP is 2.58 times less risky than WUXI BIOLOGICS. It trades about -0.27 of its potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about -0.28 per unit of risk. If you would invest 2,407 in UNIVERSAL MUSIC GROUP on August 29, 2024 and sell it today you would lose (183.00) from holding UNIVERSAL MUSIC GROUP or give up 7.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL MUSIC GROUP vs. WUXI BIOLOGICS UNSPADR2
Performance |
| Timeline |
| UNIVERSAL MUSIC GROUP |
| WUXI BIOLOGICS UNSPADR2 |
UNIVERSAL MUSIC and WUXI BIOLOGICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL MUSIC and WUXI BIOLOGICS
The main advantage of trading using opposite UNIVERSAL MUSIC and WUXI BIOLOGICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, WUXI BIOLOGICS 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 WUXI BIOLOGICS will offset losses from the drop in WUXI BIOLOGICS's long position.| UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc |
| WUXI BIOLOGICS vs. Siamgas And Petrochemicals | WUXI BIOLOGICS vs. Sixt Leasing SE | WUXI BIOLOGICS vs. Kaiser Aluminum | WUXI BIOLOGICS vs. Air Lease |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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