Correlation Between Universal Music and Acco Brands
Can any of the company-specific risk be diversified away by investing in both Universal Music and Acco Brands 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 Acco Brands 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 Acco Brands, you can compare the effects of market volatilities on Universal Music and Acco Brands 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 Acco Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Acco Brands.
Diversification Opportunities for Universal Music and Acco Brands
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and Acco is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Acco Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acco Brands 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 Acco Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acco Brands has no effect on the direction of Universal Music i.e., Universal Music and Acco Brands go up and down completely randomly.
Pair Corralation between Universal Music and Acco Brands
Assuming the 90 days horizon Universal Music Group is expected to under-perform the Acco Brands. But the pink sheet apears to be less risky and, when comparing its historical volatility, Universal Music Group is 1.44 times less risky than Acco Brands. The pink sheet trades about -0.16 of its potential returns per unit of risk. The Acco Brands is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 488.00 in Acco Brands on August 27, 2024 and sell it today you would earn a total of 108.00 from holding Acco Brands or generate 22.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. Acco Brands
Performance |
| Timeline |
| Universal Music Group |
| Acco Brands |
Universal Music and Acco Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Acco Brands
The main advantage of trading using opposite Universal Music and Acco Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Acco Brands 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 Acco Brands will offset losses from the drop in Acco Brands' long position.| Universal Music vs. Thunderbird Entertainment Group | Universal Music vs. Warner Music Group | Universal Music vs. Live Nation Entertainment | Universal Music vs. Atlanta Braves Holdings, |
| Acco Brands vs. HNI Corp | Acco Brands vs. Steelcase | Acco Brands vs. Ennis Inc | Acco Brands vs. Acacia Research |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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