Correlation Between Maanshan Iron and Warner Music
Can any of the company-specific risk be diversified away by investing in both Maanshan Iron 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 Maanshan Iron and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Maanshan Iron Steel and Warner Music Group, you can compare the effects of market volatilities on Maanshan Iron 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 Maanshan Iron with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maanshan Iron and Warner Music.
Diversification Opportunities for Maanshan Iron and Warner Music
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Maanshan and Warner is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Maanshan Iron Steel 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 Maanshan Iron 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 Maanshan Iron Steel 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 Maanshan Iron i.e., Maanshan Iron and Warner Music go up and down completely randomly.
Pair Corralation between Maanshan Iron and Warner Music
Assuming the 90 days horizon Maanshan Iron Steel is expected to generate 2.9 times more return on investment than Warner Music. However, Maanshan Iron is 2.9 times more volatile than Warner Music Group. It trades about 0.02 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.02 per unit of risk. If you would invest 18.00 in Maanshan Iron Steel on September 12, 2024 and sell it today you would earn a total of 0.00 from holding Maanshan Iron Steel or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Maanshan Iron Steel vs. Warner Music Group
Performance |
| Timeline |
| Maanshan Iron Steel |
| Warner Music Group |
Maanshan Iron and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Maanshan Iron and Warner Music
The main advantage of trading using opposite Maanshan Iron and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maanshan Iron 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.| Maanshan Iron vs. ArcelorMittal SA ADR | Maanshan Iron vs. Gerdau SA ADR | Maanshan Iron vs. POSCO Holdings | Maanshan Iron vs. HUMANA INC |
| Warner Music vs. Aeye Inc | Warner Music vs. Ep Emerging Markets | Warner Music vs. ALPS Emerging Sector | Warner Music vs. First Physicians Capital |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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