Correlation Between Cleantech Power and Warner Music
Can any of the company-specific risk be diversified away by investing in both Cleantech Power 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 Cleantech Power and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cleantech Power Corp and Warner Music Group, you can compare the effects of market volatilities on Cleantech Power 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 Cleantech Power with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cleantech Power and Warner Music.
Diversification Opportunities for Cleantech Power and Warner Music
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cleantech and Warner is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cleantech Power Corp 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 Cleantech Power 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 Cleantech Power Corp 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 Cleantech Power i.e., Cleantech Power and Warner Music go up and down completely randomly.
Pair Corralation between Cleantech Power and Warner Music
Assuming the 90 days horizon Cleantech Power Corp is expected to generate 45.01 times more return on investment than Warner Music. However, Cleantech Power is 45.01 times more volatile than Warner Music Group. It trades about 0.1 of its potential returns per unit of risk. Warner Music Group is currently generating about 0.01 per unit of risk. If you would invest 5.67 in Cleantech Power Corp on September 2, 2024 and sell it today you would lose (5.08) from holding Cleantech Power Corp or give up 89.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 93.15% |
| Values | Daily Returns |
Cleantech Power Corp vs. Warner Music Group
Performance |
| Timeline |
| Cleantech Power Corp |
| Warner Music Group |
Cleantech Power and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cleantech Power and Warner Music
The main advantage of trading using opposite Cleantech Power and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cleantech Power 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.| Cleantech Power vs. Legacy Education | Cleantech Power vs. Apple Inc | Cleantech Power vs. NVIDIA | Cleantech Power vs. Microsoft |
| 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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