Correlation Between China Aircraft and Warner Music
Can any of the company-specific risk be diversified away by investing in both China Aircraft and Warner 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 China Aircraft and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Aircraft Leasing and Warner Music Group, you can compare the effects of market volatilities on China Aircraft and Warner 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 China Aircraft with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Warner Music.
Diversification Opportunities for China Aircraft and Warner Music
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Warner is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of China Aircraft i.e., China Aircraft and Warner Music go up and down completely randomly.
Pair Corralation between China Aircraft and Warner Music
Assuming the 90 days horizon China Aircraft Leasing is expected to generate 2.03 times more return on investment than Warner Music. However, China Aircraft is 2.03 times more volatile than Warner Music Group. It trades about 0.08 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.01 per unit of risk. If you would invest 13.00 in China Aircraft Leasing on August 28, 2024 and sell it today you would earn a total of 27.00 from holding China Aircraft Leasing or generate 207.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Aircraft Leasing vs. Warner Music Group
Performance |
| Timeline |
| China Aircraft Leasing |
| Warner Music Group |
China Aircraft and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Aircraft and Warner Music
The main advantage of trading using opposite China Aircraft and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Aircraft position performs unexpectedly, Warner 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 Warner Music will offset losses from the drop in Warner Music's long position.| China Aircraft vs. Grocery Outlet Holding | China Aircraft vs. Turning Point Brands | China Aircraft vs. Marfrig Global Foods | China Aircraft vs. FitLife Brands, Common |
| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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