Correlation Between Tetragon Financial and Universal Music
Can any of the company-specific risk be diversified away by investing in both Tetragon Financial 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 Tetragon Financial and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tetragon Financial Group and Universal Music Group, you can compare the effects of market volatilities on Tetragon Financial 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 Tetragon Financial with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tetragon Financial and Universal Music.
Diversification Opportunities for Tetragon Financial and Universal Music
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Tetragon and Universal is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Tetragon Financial Group 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 Tetragon Financial 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 Tetragon Financial Group 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 Tetragon Financial i.e., Tetragon Financial and Universal Music go up and down completely randomly.
Pair Corralation between Tetragon Financial and Universal Music
Assuming the 90 days trading horizon Tetragon Financial is expected to generate 1.73 times less return on investment than Universal Music. In addition to that, Tetragon Financial is 1.48 times more volatile than Universal Music Group. It trades about 0.02 of its total potential returns per unit of risk. Universal Music Group is currently generating about 0.05 per unit of volatility. If you would invest 2,298 in Universal Music Group on September 4, 2024 and sell it today you would earn a total of 31.00 from holding Universal Music Group or generate 1.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.82% |
| Values | Daily Returns |
Tetragon Financial Group vs. Universal Music Group
Performance |
| Timeline |
| Tetragon Financial |
| Universal Music Group |
Tetragon Financial and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tetragon Financial and Universal Music
The main advantage of trading using opposite Tetragon Financial and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tetragon Financial 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.The idea behind Tetragon Financial Group and Universal Music Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Universal Music vs. Vivendi SA | Universal Music vs. Prosus NV | Universal Music vs. Pershing Square Holdings | Universal Music vs. Adyen NV |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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