Correlation Between Universal Music and Cleen Energy
Can any of the company-specific risk be diversified away by investing in both Universal Music and Cleen Energy 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 Cleen Energy 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 Cleen Energy AG, you can compare the effects of market volatilities on Universal Music and Cleen Energy 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 Cleen Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Cleen Energy.
Diversification Opportunities for Universal Music and Cleen Energy
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Cleen is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Cleen Energy AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cleen Energy AG 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 Cleen Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cleen Energy AG has no effect on the direction of Universal Music i.e., Universal Music and Cleen Energy go up and down completely randomly.
Pair Corralation between Universal Music and Cleen Energy
Assuming the 90 days trading horizon Universal Music Group is expected to generate 0.17 times more return on investment than Cleen Energy. However, Universal Music Group is 5.75 times less risky than Cleen Energy. It trades about 0.01 of its potential returns per unit of risk. Cleen Energy AG is currently generating about -0.01 per unit of risk. If you would invest 2,802 in Universal Music Group on November 28, 2024 and sell it today you would earn a total of 11.00 from holding Universal Music Group or generate 0.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Universal Music Group vs. Cleen Energy AG
Performance |
| Timeline |
| Universal Music Group |
| Cleen Energy AG |
Universal Music and Cleen Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Cleen Energy
The main advantage of trading using opposite Universal Music and Cleen Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Cleen Energy 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 Cleen Energy will offset losses from the drop in Cleen Energy's long position.| Universal Music vs. Oberbank AG | Universal Music vs. Erste Group Bank | Universal Music vs. SBM Offshore NV | Universal Music vs. CNH Industrial NV |
| Cleen Energy vs. Vienna Insurance Group | Cleen Energy vs. BKS Bank AG | Cleen Energy vs. AMAG Austria Metall | Cleen Energy vs. Oberbank AG |
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 Stocks Directory module to find actively traded stocks across global markets.
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