Correlation Between Universal Music and Tetragon Financial
Can any of the company-specific risk be diversified away by investing in both Universal Music and Tetragon Financial 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 Universal Music and Tetragon Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and Tetragon Financial Group, you can compare the effects of market volatilities on Universal Music and Tetragon Financial 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 Universal Music with a short position of Tetragon Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Tetragon Financial.
Diversification Opportunities for Universal Music and Tetragon Financial
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Tetragon is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Tetragon Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tetragon Financial and Universal Music 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 Universal Music Group are associated (or correlated) with Tetragon Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tetragon Financial has no effect on the direction of Universal Music i.e., Universal Music and Tetragon Financial go up and down completely randomly.
Pair Corralation between Universal Music and Tetragon Financial
Assuming the 90 days trading horizon Universal Music is expected to generate 14.18 times less return on investment than Tetragon Financial. But when comparing it to its historical volatility, Universal Music Group is 1.5 times less risky than Tetragon Financial. It trades about 0.03 of its potential returns per unit of risk. Tetragon Financial Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,300 in Tetragon Financial Group on September 12, 2024 and sell it today you would earn a total of 130.00 from holding Tetragon Financial Group or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Universal Music Group vs. Tetragon Financial Group
Performance |
| Timeline |
| Universal Music Group |
| Tetragon Financial |
Universal Music and Tetragon Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Tetragon Financial
The main advantage of trading using opposite Universal Music and Tetragon Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Tetragon Financial 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 Tetragon Financial will offset losses from the drop in Tetragon Financial's long position.| Universal Music vs. Vivendi SA | Universal Music vs. Prosus NV | Universal Music vs. Pershing Square Holdings | Universal Music vs. Adyen NV |
| Tetragon Financial vs. Eurocastle Investment | Tetragon Financial vs. Kendrion NV | Tetragon Financial vs. Brunel International NV | Tetragon Financial vs. iShares MSCI USA |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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