Correlation Between Universal Music and Aozora Bank
Can any of the company-specific risk be diversified away by investing in both Universal Music and Aozora Bank 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 Aozora Bank 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 Aozora Bank, you can compare the effects of market volatilities on Universal Music and Aozora Bank 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 Aozora Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Aozora Bank.
Diversification Opportunities for Universal Music and Aozora Bank
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Universal and Aozora is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Aozora Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aozora Bank 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 Aozora Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aozora Bank has no effect on the direction of Universal Music i.e., Universal Music and Aozora Bank go up and down completely randomly.
Pair Corralation between Universal Music and Aozora Bank
If you would invest 1,230 in Universal Music Group on October 9, 2024 and sell it today you would earn a total of 23.00 from holding Universal Music Group or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 5.26% |
| Values | Daily Returns |
Universal Music Group vs. Aozora Bank
Performance |
| Timeline |
| Universal Music Group |
| Aozora Bank |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Universal Music and Aozora Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Aozora Bank
The main advantage of trading using opposite Universal Music and Aozora Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Aozora Bank 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 Aozora Bank will offset losses from the drop in Aozora Bank's long position.| Universal Music vs. Universal Media Group | Universal Music vs. Bollor SE | Universal Music vs. Reading International | Universal Music vs. Warner Music Group |
| Aozora Bank vs. HUHUTECH International Group | Aozora Bank vs. Sphere Entertainment Co | Aozora Bank vs. NetEase | Aozora Bank vs. Nippon Steel 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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