Correlation Between HomeToGo and Warner Music
Can any of the company-specific risk be diversified away by investing in both HomeToGo 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 HomeToGo and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HomeToGo SE and Warner Music Group, you can compare the effects of market volatilities on HomeToGo 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 HomeToGo with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of HomeToGo and Warner Music.
Diversification Opportunities for HomeToGo and Warner Music
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HomeToGo and Warner is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding HomeToGo SE 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 HomeToGo 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 HomeToGo SE 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 HomeToGo i.e., HomeToGo and Warner Music go up and down completely randomly.
Pair Corralation between HomeToGo and Warner Music
Assuming the 90 days trading horizon HomeToGo is expected to generate 13.23 times less return on investment than Warner Music. In addition to that, HomeToGo is 1.66 times more volatile than Warner Music Group. It trades about 0.0 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 2,743 in Warner Music Group on September 21, 2024 and sell it today you would earn a total of 290.00 from holding Warner Music Group or generate 10.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
HomeToGo SE vs. Warner Music Group
Performance |
| Timeline |
| HomeToGo SE |
| Warner Music Group |
HomeToGo and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HomeToGo and Warner Music
The main advantage of trading using opposite HomeToGo and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HomeToGo 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.| HomeToGo vs. Tencent Holdings | HomeToGo vs. Superior Plus Corp | HomeToGo vs. SIVERS SEMICONDUCTORS AB | HomeToGo vs. NorAm Drilling AS |
| Warner Music vs. The Walt Disney | Warner Music vs. Charter Communications | Warner Music vs. Superior Plus Corp | Warner Music vs. SIVERS SEMICONDUCTORS AB |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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