Correlation Between Universal Music and Lion One
Can any of the company-specific risk be diversified away by investing in both Universal Music and Lion One 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 Lion One 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 Lion One Metals, you can compare the effects of market volatilities on Universal Music and Lion One 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 Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Lion One.
Diversification Opportunities for Universal Music and Lion One
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Lion is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals 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 Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Universal Music i.e., Universal Music and Lion One go up and down completely randomly.
Pair Corralation between Universal Music and Lion One
Assuming the 90 days horizon Universal Music Group is expected to generate 0.73 times more return on investment than Lion One. However, Universal Music Group is 1.37 times less risky than Lion One. It trades about -0.16 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.35 per unit of risk. If you would invest 2,570 in Universal Music Group on August 27, 2024 and sell it today you would lose (180.00) from holding Universal Music Group or give up 7.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. Lion One Metals
Performance |
| Timeline |
| Universal Music Group |
| Lion One Metals |
Universal Music and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Lion One
The main advantage of trading using opposite Universal Music and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's 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, |
| Lion One vs. Ascendant Resources | Lion One vs. Cantex Mine Development | Lion One vs. Amarc Resources | Lion One vs. Sterling Metals Corp |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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