Correlation Between Mangels Industrial and Warner Music
Can any of the company-specific risk be diversified away by investing in both Mangels Industrial 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 Mangels Industrial and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mangels Industrial SA and Warner Music Group, you can compare the effects of market volatilities on Mangels Industrial 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 Mangels Industrial with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mangels Industrial and Warner Music.
Diversification Opportunities for Mangels Industrial and Warner Music
-0.89 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Mangels and Warner is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Mangels Industrial SA 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 Mangels Industrial 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 Mangels Industrial SA 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 Mangels Industrial i.e., Mangels Industrial and Warner Music go up and down completely randomly.
Pair Corralation between Mangels Industrial and Warner Music
Assuming the 90 days trading horizon Mangels Industrial SA is expected to under-perform the Warner Music. In addition to that, Mangels Industrial is 1.61 times more volatile than Warner Music Group. It trades about -0.02 of its total potential returns per unit of risk. Warner Music Group is currently generating about 0.02 per unit of volatility. If you would invest 4,336 in Warner Music Group on August 30, 2024 and sell it today you would earn a total of 404.00 from holding Warner Music Group or generate 9.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 96.79% |
| Values | Daily Returns |
Mangels Industrial SA vs. Warner Music Group
Performance |
| Timeline |
| Mangels Industrial |
| Warner Music Group |
Mangels Industrial and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mangels Industrial and Warner Music
The main advantage of trading using opposite Mangels Industrial and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mangels Industrial 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.| Mangels Industrial vs. Schulz SA | Mangels Industrial vs. Springs Global Participaes | Mangels Industrial vs. Marcopolo SA |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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