Correlation Between UNIVERSAL MUSIC and SYSTEMAIR
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and SYSTEMAIR 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 SYSTEMAIR 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 SYSTEMAIR AB, you can compare the effects of market volatilities on UNIVERSAL MUSIC and SYSTEMAIR 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 SYSTEMAIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and SYSTEMAIR.
Diversification Opportunities for UNIVERSAL MUSIC and SYSTEMAIR
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNIVERSAL and SYSTEMAIR is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and SYSTEMAIR AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYSTEMAIR AB 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 SYSTEMAIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYSTEMAIR AB has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and SYSTEMAIR go up and down completely randomly.
Pair Corralation between UNIVERSAL MUSIC and SYSTEMAIR
Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to generate 0.63 times more return on investment than SYSTEMAIR. However, UNIVERSAL MUSIC GROUP is 1.6 times less risky than SYSTEMAIR. It trades about 0.32 of its potential returns per unit of risk. SYSTEMAIR AB is currently generating about -0.1 per unit of risk. If you would invest 2,420 in UNIVERSAL MUSIC GROUP on November 3, 2024 and sell it today you would earn a total of 267.00 from holding UNIVERSAL MUSIC GROUP or generate 11.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL MUSIC GROUP vs. SYSTEMAIR AB
Performance |
| Timeline |
| UNIVERSAL MUSIC GROUP |
| SYSTEMAIR AB |
UNIVERSAL MUSIC and SYSTEMAIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL MUSIC and SYSTEMAIR
The main advantage of trading using opposite UNIVERSAL MUSIC and SYSTEMAIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, SYSTEMAIR 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 SYSTEMAIR will offset losses from the drop in SYSTEMAIR's long position.| UNIVERSAL MUSIC vs. PULSION Medical Systems | UNIVERSAL MUSIC vs. Avanos Medical | UNIVERSAL MUSIC vs. Compugroup Medical SE | UNIVERSAL MUSIC vs. OPKO HEALTH |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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