Correlation Between America Movil and Universal Music
Can any of the company-specific risk be diversified away by investing in both America Movil 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 America Movil and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMX-Index and Universal Music Group, you can compare the effects of market volatilities on America Movil 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 America Movil with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of America Movil and Universal Music.
Diversification Opportunities for America Movil and Universal Music
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between America and Universal is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AMX-Index 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 America Movil 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 AMX-Index 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 America Movil i.e., America Movil and Universal Music go up and down completely randomly.
Pair Corralation between America Movil and Universal Music
Assuming the 90 days trading horizon AMX-Index is expected to under-perform the Universal Music. But the index apears to be less risky and, when comparing its historical volatility, AMX-Index is 1.45 times less risky than Universal Music. The index trades about -0.02 of its potential returns per unit of risk. The Universal Music Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,330 in Universal Music Group on September 12, 2024 and sell it today you would earn a total of 24.00 from holding Universal Music Group or generate 1.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMX-Index vs. Universal Music Group
Performance |
| Timeline |
America Movil and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
AMX-Index
Pair trading matchups for America Movil
Universal Music Group
Pair trading matchups for Universal Music
Pair Trading with America Movil and Universal Music
The main advantage of trading using opposite America Movil and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if America Movil 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.| America Movil vs. AMG Advanced Metallurgical | America Movil vs. Sligro Food Group | America Movil vs. Tetragon Financial Group | America Movil vs. Reinet Investments SCA |
| Universal Music vs. Vivendi SA | Universal Music vs. Prosus NV | Universal Music vs. Pershing Square Holdings | Universal Music vs. Adyen NV |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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