Correlation Between New Wave and Universal Media
Can any of the company-specific risk be diversified away by investing in both New Wave and Universal Media 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 New Wave and Universal Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Wave Holdings and Universal Media Group, you can compare the effects of market volatilities on New Wave and Universal Media 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 New Wave with a short position of Universal Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Universal Media.
Diversification Opportunities for New Wave and Universal Media
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between New and Universal is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Holdings and Universal Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Media Group and New Wave 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 New Wave Holdings are associated (or correlated) with Universal Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Media Group has no effect on the direction of New Wave i.e., New Wave and Universal Media go up and down completely randomly.
Pair Corralation between New Wave and Universal Media
Assuming the 90 days horizon New Wave Holdings is expected to generate 1.65 times more return on investment than Universal Media. However, New Wave is 1.65 times more volatile than Universal Media Group. It trades about 0.06 of its potential returns per unit of risk. Universal Media Group is currently generating about 0.02 per unit of risk. If you would invest 3.59 in New Wave Holdings on November 4, 2024 and sell it today you would lose (2.09) from holding New Wave Holdings or give up 58.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
New Wave Holdings vs. Universal Media Group
Performance |
| Timeline |
| New Wave Holdings |
| Universal Media Group |
New Wave and Universal Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Universal Media
The main advantage of trading using opposite New Wave and Universal Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave position performs unexpectedly, Universal Media 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 Media will offset losses from the drop in Universal Media's long position.| New Wave vs. OverActive Media Corp | New Wave vs. Network Media Group | New Wave vs. Celtic plc | New Wave vs. Guild Esports Plc |
| Universal Media vs. Precision Drilling | Universal Media vs. Borr Drilling | Universal Media vs. Ralph Lauren Corp | Universal Media vs. Sable Offshore 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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