Correlation Between China Finance and Warner Music
Can any of the company-specific risk be diversified away by investing in both China Finance 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 Finance 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 Finance and Warner Music Group, you can compare the effects of market volatilities on China Finance 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 Finance with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Finance and Warner Music.
Diversification Opportunities for China Finance and Warner Music
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Warner is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Finance 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 Finance 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 Finance 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 Finance i.e., China Finance and Warner Music go up and down completely randomly.
Pair Corralation between China Finance and Warner Music
If you would invest 0.00 in China Finance on October 13, 2024 and sell it today you would earn a total of 0.00 from holding China Finance or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
China Finance vs. Warner Music Group
Performance |
| Timeline |
| China Finance |
| Warner Music Group |
China Finance and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Finance and Warner Music
The main advantage of trading using opposite China Finance and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Finance 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 Finance vs. Warner Music Group | China Finance vs. Worthington Steel | China Finance vs. Diageo PLC ADR | China Finance vs. Ironveld Plc |
| 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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