Correlation Between UNIVERSAL MUSIC and Quaker Chemical
Can any of the company-specific risk be diversified away by investing in both UNIVERSAL MUSIC and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical, you can compare the effects of market volatilities on UNIVERSAL MUSIC and Quaker Chemical 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 Quaker Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVERSAL MUSIC and Quaker Chemical.
Diversification Opportunities for UNIVERSAL MUSIC and Quaker Chemical
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNIVERSAL and Quaker is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding UNIVERSAL MUSIC GROUP and Quaker Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quaker Chemical 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 Quaker Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quaker Chemical has no effect on the direction of UNIVERSAL MUSIC i.e., UNIVERSAL MUSIC and Quaker Chemical go up and down completely randomly.
Pair Corralation between UNIVERSAL MUSIC and Quaker Chemical
Assuming the 90 days horizon UNIVERSAL MUSIC GROUP is expected to under-perform the Quaker Chemical. But the stock apears to be less risky and, when comparing its historical volatility, UNIVERSAL MUSIC GROUP is 1.0 times less risky than Quaker Chemical. The stock trades about -0.08 of its potential returns per unit of risk. The Quaker Chemical is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 16,499 in Quaker Chemical on September 1, 2024 and sell it today you would lose (1,899) from holding Quaker Chemical or give up 11.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNIVERSAL MUSIC GROUP vs. Quaker Chemical
Performance |
| Timeline |
| UNIVERSAL MUSIC GROUP |
| Quaker Chemical |
UNIVERSAL MUSIC and Quaker Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNIVERSAL MUSIC and Quaker Chemical
The main advantage of trading using opposite UNIVERSAL MUSIC and Quaker Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVERSAL MUSIC position performs unexpectedly, Quaker Chemical 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 Quaker Chemical will offset losses from the drop in Quaker Chemical's long position.| UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc |
| Quaker Chemical vs. Transport International Holdings | Quaker Chemical vs. TSOGO SUN GAMING | Quaker Chemical vs. Air Transport Services | Quaker Chemical vs. EVS Broadcast Equipment |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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