Correlation Between Aflac Incorporated and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both Aflac Incorporated 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 Aflac Incorporated and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aflac Incorporated and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on Aflac Incorporated 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 Aflac Incorporated with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aflac Incorporated and UNIVERSAL MUSIC.
Diversification Opportunities for Aflac Incorporated and UNIVERSAL MUSIC
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Aflac and UNIVERSAL is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Aflac Incorporated 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 Aflac Incorporated 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 Aflac Incorporated 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 Aflac Incorporated i.e., Aflac Incorporated and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between Aflac Incorporated and UNIVERSAL MUSIC
Assuming the 90 days trading horizon Aflac Incorporated is expected to generate 1.24 times more return on investment than UNIVERSAL MUSIC. However, Aflac Incorporated is 1.24 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.26 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about -0.17 per unit of risk. If you would invest 9,905 in Aflac Incorporated on August 31, 2024 and sell it today you would earn a total of 935.00 from holding Aflac Incorporated or generate 9.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aflac Incorporated vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| Aflac Incorporated |
| UNIVERSAL MUSIC GROUP |
Aflac Incorporated and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aflac Incorporated and UNIVERSAL MUSIC
The main advantage of trading using opposite Aflac Incorporated and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aflac Incorporated 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.| Aflac Incorporated vs. MOVIE GAMES SA | Aflac Incorporated vs. Evolution Mining Limited | Aflac Incorporated vs. SERI INDUSTRIAL EO | Aflac Incorporated vs. UNIVMUSIC GRPADR050 |
| UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc | UNIVERSAL MUSIC vs. Apple Inc |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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