Correlation Between Valneva SE and Warner Music
Can any of the company-specific risk be diversified away by investing in both Valneva SE and Warner Music 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 Valneva SE and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Valneva SE ADR and Warner Music Group, you can compare the effects of market volatilities on Valneva SE and Warner Music 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 Valneva SE with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Valneva SE and Warner Music.
Diversification Opportunities for Valneva SE and Warner Music
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Valneva and Warner is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Valneva SE ADR and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group and Valneva SE 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 Valneva SE ADR are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Valneva SE i.e., Valneva SE and Warner Music go up and down completely randomly.
Pair Corralation between Valneva SE and Warner Music
Given the investment horizon of 90 days Valneva SE ADR is expected to under-perform the Warner Music. In addition to that, Valneva SE is 1.85 times more volatile than Warner Music Group. It trades about -0.1 of its total potential returns per unit of risk. Warner Music Group is currently generating about 0.02 per unit of volatility. If you would invest 2,961 in Warner Music Group on September 12, 2024 and sell it today you would earn a total of 256.00 from holding Warner Music Group or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Valneva SE ADR vs. Warner Music Group
Performance |
| Timeline |
| Valneva SE ADR |
| Warner Music Group |
Valneva SE and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Valneva SE and Warner Music
The main advantage of trading using opposite Valneva SE and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Valneva SE position performs unexpectedly, Warner Music 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 Warner Music will offset losses from the drop in Warner Music's long position.| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
| Warner Music vs. Aeye Inc | Warner Music vs. Ep Emerging Markets | Warner Music vs. ALPS Emerging Sector | Warner Music vs. First Physicians Capital |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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