Correlation Between SWISS WATER and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both SWISS WATER and UNIVERSAL MUSIC 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 SWISS WATER and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SWISS WATER DECAFFCOFFEE and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on SWISS WATER and UNIVERSAL MUSIC 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 SWISS WATER with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SWISS WATER and UNIVERSAL MUSIC.
Diversification Opportunities for SWISS WATER and UNIVERSAL MUSIC
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SWISS and UNIVERSAL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding SWISS WATER DECAFFCOFFEE and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP and SWISS WATER 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 SWISS WATER DECAFFCOFFEE are associated (or correlated) with UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of SWISS WATER i.e., SWISS WATER and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between SWISS WATER and UNIVERSAL MUSIC
Assuming the 90 days horizon SWISS WATER DECAFFCOFFEE is expected to generate 1.51 times more return on investment than UNIVERSAL MUSIC. However, SWISS WATER is 1.51 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.03 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about 0.02 per unit of risk. If you would invest 196.00 in SWISS WATER DECAFFCOFFEE on October 16, 2024 and sell it today you would earn a total of 42.00 from holding SWISS WATER DECAFFCOFFEE or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SWISS WATER DECAFFCOFFEE vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| SWISS WATER DECAFFCOFFEE |
| UNIVERSAL MUSIC GROUP |
SWISS WATER and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SWISS WATER and UNIVERSAL MUSIC
The main advantage of trading using opposite SWISS WATER and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SWISS WATER position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.| SWISS WATER vs. Planet Fitness | SWISS WATER vs. PURETECH HEALTH PLC | SWISS WATER vs. Guangdong Investment Limited | SWISS WATER vs. Aluminum of |
| UNIVERSAL MUSIC vs. MAGIC SOFTWARE ENTR | UNIVERSAL MUSIC vs. Sqs Software Quality | UNIVERSAL MUSIC vs. Commercial Vehicle Group | UNIVERSAL MUSIC vs. SK TELECOM TDADR |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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