Correlation Between Harmony Gold and Warner Music
Can any of the company-specific risk be diversified away by investing in both Harmony Gold 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 Harmony Gold and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Harmony Gold Mining and Warner Music Group, you can compare the effects of market volatilities on Harmony Gold 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 Harmony Gold with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Harmony Gold and Warner Music.
Diversification Opportunities for Harmony Gold and Warner Music
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Harmony and Warner is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Harmony Gold Mining 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 Harmony Gold 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 Harmony Gold Mining 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 Harmony Gold i.e., Harmony Gold and Warner Music go up and down completely randomly.
Pair Corralation between Harmony Gold and Warner Music
Considering the 90-day investment horizon Harmony Gold Mining is expected to under-perform the Warner Music. In addition to that, Harmony Gold is 1.77 times more volatile than Warner Music Group. It trades about -0.18 of its total potential returns per unit of risk. Warner Music Group is currently generating about 0.05 per unit of volatility. If you would invest 3,204 in Warner Music Group on September 2, 2024 and sell it today you would earn a total of 48.00 from holding Warner Music Group or generate 1.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Harmony Gold Mining vs. Warner Music Group
Performance |
| Timeline |
| Harmony Gold Mining |
| Warner Music Group |
Harmony Gold and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Harmony Gold and Warner Music
The main advantage of trading using opposite Harmony Gold and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Harmony Gold 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.| Harmony Gold vs. Fortitude Gold Corp | Harmony Gold vs. New Gold | Harmony Gold vs. Galiano Gold | Harmony Gold vs. GoldMining |
| Warner Music vs. ADTRAN Inc | Warner Music vs. Belden Inc | Warner Music vs. ADC Therapeutics SA | Warner Music vs. Comtech Telecommunications Corp |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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