Correlation Between New Wave and Warner Music
Can any of the company-specific risk be diversified away by investing in both New Wave 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 New Wave and Warner Music 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 Warner Music Group, you can compare the effects of market volatilities on New Wave 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 New Wave with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Wave and Warner Music.
Diversification Opportunities for New Wave and Warner Music
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between New and Warner is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding New Wave Holdings 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 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 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 New Wave i.e., New Wave and Warner Music go up and down completely randomly.
Pair Corralation between New Wave and Warner Music
Assuming the 90 days horizon New Wave Holdings is expected to generate 13.05 times more return on investment than Warner Music. However, New Wave is 13.05 times more volatile than Warner Music Group. It trades about 0.06 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 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 Against |
| Strength | Insignificant |
| Accuracy | 98.41% |
| Values | Daily Returns |
New Wave Holdings vs. Warner Music Group
Performance |
| Timeline |
| New Wave Holdings |
| Warner Music Group |
New Wave and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Wave and Warner Music
The main advantage of trading using opposite New Wave and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Wave 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.| New Wave vs. OverActive Media Corp | New Wave vs. Network Media Group | New Wave vs. Celtic plc | New Wave vs. Guild Esports Plc |
| Warner Music vs. Liberty Media | Warner Music vs. Atlanta Braves Holdings, | Warner Music vs. News Corp B | Warner Music vs. News Corp A |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes |