Correlation Between VIVA WINE and Warner Music
Can any of the company-specific risk be diversified away by investing in both VIVA WINE 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 VIVA WINE and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VIVA WINE GROUP and Warner Music Group, you can compare the effects of market volatilities on VIVA WINE 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 VIVA WINE with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and Warner Music.
Diversification Opportunities for VIVA WINE and Warner Music
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between VIVA and Warner is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP 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 VIVA WINE 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 VIVA WINE GROUP 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 VIVA WINE i.e., VIVA WINE and Warner Music go up and down completely randomly.
Pair Corralation between VIVA WINE and Warner Music
Assuming the 90 days horizon VIVA WINE GROUP is expected to under-perform the Warner Music. But the stock apears to be less risky and, when comparing its historical volatility, VIVA WINE GROUP is 1.39 times less risky than Warner Music. The stock trades about -0.19 of its potential returns per unit of risk. The Warner Music Group is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,042 in Warner Music Group on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Warner Music Group or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
VIVA WINE GROUP vs. Warner Music Group
Performance |
| Timeline |
| VIVA WINE GROUP |
| Warner Music Group |
VIVA WINE and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VIVA WINE and Warner Music
The main advantage of trading using opposite VIVA WINE and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VIVA WINE 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.The idea behind VIVA WINE GROUP and Warner Music Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies |