Correlation Between Mercantile Investment and Universal Music
Can any of the company-specific risk be diversified away by investing in both Mercantile Investment and Universal 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 Mercantile Investment and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Mercantile Investment and Universal Music Group, you can compare the effects of market volatilities on Mercantile Investment and Universal 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 Mercantile Investment with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mercantile Investment and Universal Music.
Diversification Opportunities for Mercantile Investment and Universal Music
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Mercantile and Universal is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding The Mercantile Investment and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group and Mercantile Investment 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 The Mercantile Investment are associated (or correlated) with Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Mercantile Investment i.e., Mercantile Investment and Universal Music go up and down completely randomly.
Pair Corralation between Mercantile Investment and Universal Music
Assuming the 90 days trading horizon The Mercantile Investment is expected to generate 1.07 times more return on investment than Universal Music. However, Mercantile Investment is 1.07 times more volatile than Universal Music Group. It trades about 0.05 of its potential returns per unit of risk. Universal Music Group is currently generating about -0.02 per unit of risk. If you would invest 23,500 in The Mercantile Investment on September 4, 2024 and sell it today you would earn a total of 200.00 from holding The Mercantile Investment or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
The Mercantile Investment vs. Universal Music Group
Performance |
| Timeline |
| The Mercantile Investment |
| Universal Music Group |
Mercantile Investment and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mercantile Investment and Universal Music
The main advantage of trading using opposite Mercantile Investment and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mercantile Investment position performs unexpectedly, Universal 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 Universal Music will offset losses from the drop in Universal Music's long position.| Mercantile Investment vs. Sovereign Metals | Mercantile Investment vs. Iron Mountain | Mercantile Investment vs. European Metals Holdings | Mercantile Investment vs. Veolia Environnement VE |
| Universal Music vs. Beeks Trading | Universal Music vs. TR Property Investment | Universal Music vs. Lowland Investment Co | Universal Music vs. The Mercantile Investment |
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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