Correlation Between Universal Music and IShares ATX
Can any of the company-specific risk be diversified away by investing in both Universal Music and IShares ATX 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 IShares ATX 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 iShares ATX UCITS, you can compare the effects of market volatilities on Universal Music and IShares ATX 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 IShares ATX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and IShares ATX.
Diversification Opportunities for Universal Music and IShares ATX
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Universal and IShares is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and iShares ATX UCITS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ATX UCITS 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 IShares ATX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ATX UCITS has no effect on the direction of Universal Music i.e., Universal Music and IShares ATX go up and down completely randomly.
Pair Corralation between Universal Music and IShares ATX
Assuming the 90 days trading horizon Universal Music is expected to generate 1.05 times less return on investment than IShares ATX. In addition to that, Universal Music is 1.79 times more volatile than iShares ATX UCITS. It trades about 0.01 of its total potential returns per unit of risk. iShares ATX UCITS is currently generating about 0.02 per unit of volatility. If you would invest 3,428 in iShares ATX UCITS on August 26, 2024 and sell it today you would earn a total of 329.00 from holding iShares ATX UCITS or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. iShares ATX UCITS
Performance |
| Timeline |
| Universal Music Group |
| iShares ATX UCITS |
Universal Music and IShares ATX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and IShares ATX
The main advantage of trading using opposite Universal Music and IShares ATX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, IShares ATX 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 IShares ATX will offset losses from the drop in IShares ATX's long position.| Universal Music vs. AMAG Austria Metall | Universal Music vs. Erste Group Bank | Universal Music vs. Wiener Privatbank SE | Universal Music vs. Oberbank AG |
| IShares ATX vs. iShares Core DAX | IShares ATX vs. RATH Aktiengesellschaft | IShares ATX vs. AT S Austria | IShares ATX vs. BAWAG Group 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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