Correlation Between Universal Music and Procter Gamble
Can any of the company-specific risk be diversified away by investing in both Universal Music and Procter Gamble 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 Procter Gamble 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 Procter Gamble, you can compare the effects of market volatilities on Universal Music and Procter Gamble 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 Procter Gamble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Procter Gamble.
Diversification Opportunities for Universal Music and Procter Gamble
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Procter is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Procter Gamble in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procter Gamble 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 Procter Gamble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procter Gamble has no effect on the direction of Universal Music i.e., Universal Music and Procter Gamble go up and down completely randomly.
Pair Corralation between Universal Music and Procter Gamble
Assuming the 90 days horizon Universal Music Group is expected to under-perform the Procter Gamble. In addition to that, Universal Music is 2.49 times more volatile than Procter Gamble. It trades about -0.01 of its total potential returns per unit of risk. Procter Gamble is currently generating about 0.1 per unit of volatility. If you would invest 14,508 in Procter Gamble on September 3, 2024 and sell it today you would earn a total of 3,418 from holding Procter Gamble or generate 23.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Universal Music Group vs. Procter Gamble
Performance |
| Timeline |
| Universal Music Group |
| Procter Gamble |
Universal Music and Procter Gamble Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Procter Gamble
The main advantage of trading using opposite Universal Music and Procter Gamble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Procter Gamble 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 Procter Gamble will offset losses from the drop in Procter Gamble'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, |
| Procter Gamble vs. Highway Holdings Limited | Procter Gamble vs. QCR Holdings | Procter Gamble vs. Partner Communications | Procter Gamble vs. Acumen Pharmaceuticals |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |