Correlation Between Movie Studio and Warner Music
Can any of the company-specific risk be diversified away by investing in both Movie Studio 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 Movie Studio and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Movie Studio and Warner Music Group, you can compare the effects of market volatilities on Movie Studio 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 Movie Studio with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Movie Studio and Warner Music.
Diversification Opportunities for Movie Studio and Warner Music
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Movie and Warner is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Movie Studio 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 Movie Studio 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 Movie Studio 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 Movie Studio i.e., Movie Studio and Warner Music go up and down completely randomly.
Pair Corralation between Movie Studio and Warner Music
Given the investment horizon of 90 days Movie Studio is expected to generate 17.9 times more return on investment than Warner Music. However, Movie Studio is 17.9 times more volatile than Warner Music Group. It trades about 0.11 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.04 per unit of risk. If you would invest 0.11 in Movie Studio on September 1, 2024 and sell it today you would lose (0.01) from holding Movie Studio or give up 9.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Movie Studio vs. Warner Music Group
Performance |
| Timeline |
| Movie Studio |
| Warner Music Group |
Movie Studio and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Movie Studio and Warner Music
The main advantage of trading using opposite Movie Studio and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Movie Studio 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.| Movie Studio vs. Roku Inc | Movie Studio vs. SNM Gobal Holdings | Movie Studio vs. Seven Arts Entertainment | Movie Studio vs. All For One |
| Warner Music vs. ADTRAN Inc | Warner Music vs. Belden Inc | Warner Music vs. ADC Therapeutics SA | Warner Music vs. Comtech Telecommunications Corp |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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