Correlation Between Cornish Metals and Universal Music
Can any of the company-specific risk be diversified away by investing in both Cornish Metals 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 Cornish Metals and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cornish Metals and Universal Music Group, you can compare the effects of market volatilities on Cornish Metals 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 Cornish Metals with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cornish Metals and Universal Music.
Diversification Opportunities for Cornish Metals and Universal Music
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cornish and Universal is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cornish Metals 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 Cornish Metals 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 Cornish Metals 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 Cornish Metals i.e., Cornish Metals and Universal Music go up and down completely randomly.
Pair Corralation between Cornish Metals and Universal Music
Assuming the 90 days trading horizon Cornish Metals is expected to under-perform the Universal Music. In addition to that, Cornish Metals is 3.46 times more volatile than Universal Music Group. It trades about -0.11 of its total potential returns per unit of risk. Universal Music Group is currently generating about -0.18 per unit of volatility. If you would invest 2,366 in Universal Music Group on August 30, 2024 and sell it today you would lose (118.00) from holding Universal Music Group or give up 4.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cornish Metals vs. Universal Music Group
Performance |
| Timeline |
| Cornish Metals |
| Universal Music Group |
Cornish Metals and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cornish Metals and Universal Music
The main advantage of trading using opposite Cornish Metals and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cornish Metals 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.| Cornish Metals vs. CNH Industrial NV | Cornish Metals vs. Central Asia Metals | Cornish Metals vs. McEwen Mining | Cornish Metals vs. Solstad Offshore ASA |
| Universal Music vs. Tungsten West PLC | Universal Music vs. Argo Group Limited | Universal Music vs. Hardide PLC | Universal Music vs. Versarien PLC |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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