Correlation Between UNIVERSAL MUSIC and SOFI TECHNOLOGIES
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES, you can compare the effects of market volatilities on UNIVERSAL MUSIC and SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and SOFI TECHNOLOGIES.
Diversification Opportunities for UNIVERSAL MUSIC and SOFI TECHNOLOGIES
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between UNIVERSAL and SOFI is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and SOFI TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOFI TECHNOLOGIES has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and SOFI TECHNOLOGIES go up and down completely randomly.
Pair Corralation between UNIVERSAL MUSIC and SOFI TECHNOLOGIES
Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to generate 0.31 times more return on investment than SOFI TECHNOLOGIES. However, UNIVERSAL MUSIC GROUP is 3.23 times less risky than SOFI TECHNOLOGIES. It trades about -0.07 of its potential returns per unit of risk. SOFI TECHNOLOGIES is currently generating about -0.11 per unit of risk. If you would invest 2,424 in UNIVERSAL MUSIC GROUP on October 17, 2024 and sell it today you would lose (40.00) from holding UNIVERSAL MUSIC GROUP or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL MUSIC GROUP vs. SOFI TECHNOLOGIES
Performance |
| Timeline |
| UNIVERSAL MUSIC GROUP |
| SOFI TECHNOLOGIES |
UNIVERSAL MUSIC and SOFI TECHNOLOGIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL MUSIC and SOFI TECHNOLOGIES
The main advantage of trading using opposite UNIVERSAL MUSIC and SOFI TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, SOFI TECHNOLOGIES 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 SOFI TECHNOLOGIES will offset losses from the drop in SOFI TECHNOLOGIES's long position.| UNIVERSAL MUSIC vs. GRIFFIN MINING LTD | UNIVERSAL MUSIC vs. Keck Seng Investments | UNIVERSAL MUSIC vs. GREENX METALS LTD | UNIVERSAL MUSIC vs. De Grey Mining |
| SOFI TECHNOLOGIES vs. UNIVERSAL MUSIC GROUP | SOFI TECHNOLOGIES vs. Western Copper and | SOFI TECHNOLOGIES vs. Perseus Mining Limited | SOFI TECHNOLOGIES vs. ARDAGH METAL PACDL 0001 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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