Correlation Between Universal Music and ICC Holdings
Can any of the company-specific risk be diversified away by investing in both Universal Music and ICC Holdings 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 ICC Holdings 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 ICC Holdings, you can compare the effects of market volatilities on Universal Music and ICC Holdings 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 ICC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and ICC Holdings.
Diversification Opportunities for Universal Music and ICC Holdings
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Universal and ICC is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and ICC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICC Holdings 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 ICC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICC Holdings has no effect on the direction of Universal Music i.e., Universal Music and ICC Holdings go up and down completely randomly.
Pair Corralation between Universal Music and ICC Holdings
Assuming the 90 days horizon Universal Music Group is expected to under-perform the ICC Holdings. In addition to that, Universal Music is 3.84 times more volatile than ICC Holdings. It trades about -0.14 of its total potential returns per unit of risk. ICC Holdings is currently generating about -0.02 per unit of volatility. If you would invest 2,300 in ICC Holdings on August 30, 2024 and sell it today you would lose (5.00) from holding ICC Holdings or give up 0.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 78.26% |
| Values | Daily Returns |
Universal Music Group vs. ICC Holdings
Performance |
| Timeline |
| Universal Music Group |
| ICC Holdings |
Universal Music and ICC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and ICC Holdings
The main advantage of trading using opposite Universal Music and ICC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, ICC Holdings 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 ICC Holdings will offset losses from the drop in ICC Holdings' 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, |
| ICC Holdings vs. AMERISAFE | ICC Holdings vs. NMI Holdings | ICC Holdings vs. Investors Title | ICC Holdings vs. Essent Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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