Correlation Between VanEck Sustainable and Universal Music
Can any of the company-specific risk be diversified away by investing in both VanEck Sustainable 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 VanEck Sustainable and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VanEck Sustainable World and Universal Music Group, you can compare the effects of market volatilities on VanEck Sustainable 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 VanEck Sustainable with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of VanEck Sustainable and Universal Music.
Diversification Opportunities for VanEck Sustainable and Universal Music
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VanEck and Universal is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding VanEck Sustainable World 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 VanEck Sustainable 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 VanEck Sustainable World 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 VanEck Sustainable i.e., VanEck Sustainable and Universal Music go up and down completely randomly.
Pair Corralation between VanEck Sustainable and Universal Music
Assuming the 90 days trading horizon VanEck Sustainable World is expected to generate 0.53 times more return on investment than Universal Music. However, VanEck Sustainable World is 1.9 times less risky than Universal Music. It trades about 0.2 of its potential returns per unit of risk. Universal Music Group is currently generating about -0.17 per unit of risk. If you would invest 3,303 in VanEck Sustainable World on August 27, 2024 and sell it today you would earn a total of 108.00 from holding VanEck Sustainable World or generate 3.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VanEck Sustainable World vs. Universal Music Group
Performance |
| Timeline |
| VanEck Sustainable World |
| Universal Music Group |
VanEck Sustainable and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VanEck Sustainable and Universal Music
The main advantage of trading using opposite VanEck Sustainable and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VanEck Sustainable 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.| VanEck Sustainable vs. VanEck Morningstar Developed | VanEck Sustainable vs. VanEck Global Real | VanEck Sustainable vs. VanEck AEX UCITS | VanEck Sustainable vs. Vanguard FTSE All World |
| 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 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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