Correlation Between UniCredit SpA and UNIVERSAL MUSIC
Can any of the company-specific risk be diversified away by investing in both UniCredit SpA 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 UniCredit SpA and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UniCredit SpA and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on UniCredit SpA 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 UniCredit SpA with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UniCredit SpA and UNIVERSAL MUSIC.
Diversification Opportunities for UniCredit SpA and UNIVERSAL MUSIC
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UniCredit and UNIVERSAL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA 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 UniCredit SpA i.e., UniCredit SpA and UNIVERSAL MUSIC go up and down completely randomly.
Pair Corralation between UniCredit SpA and UNIVERSAL MUSIC
Assuming the 90 days trading horizon UniCredit SpA is expected to generate 1.34 times more return on investment than UNIVERSAL MUSIC. However, UniCredit SpA is 1.34 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.02 of its potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about -0.05 per unit of risk. If you would invest 3,568 in UniCredit SpA on September 3, 2024 and sell it today you would earn a total of 55.00 from holding UniCredit SpA or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
UniCredit SpA vs. UNIVERSAL MUSIC GROUP
Performance |
| Timeline |
| UniCredit SpA |
| UNIVERSAL MUSIC GROUP |
UniCredit SpA and UNIVERSAL MUSIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UniCredit SpA and UNIVERSAL MUSIC
The main advantage of trading using opposite UniCredit SpA and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UniCredit SpA 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.| UniCredit SpA vs. UNIVERSAL MUSIC GROUP | UniCredit SpA vs. Shenandoah Telecommunications | UniCredit SpA vs. SENECA FOODS A | UniCredit SpA vs. Citic Telecom International |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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