Correlation Between Warner Music and Ascendis Pharma
Can any of the company-specific risk be diversified away by investing in both Warner Music and Ascendis Pharma 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 Warner Music and Ascendis Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warner Music Group and Ascendis Pharma AS, you can compare the effects of market volatilities on Warner Music and Ascendis Pharma 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 Warner Music with a short position of Ascendis Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Ascendis Pharma.
Diversification Opportunities for Warner Music and Ascendis Pharma
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Warner and Ascendis is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Ascendis Pharma AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ascendis Pharma AS and Warner 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 Warner Music Group are associated (or correlated) with Ascendis Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ascendis Pharma AS has no effect on the direction of Warner Music i.e., Warner Music and Ascendis Pharma go up and down completely randomly.
Pair Corralation between Warner Music and Ascendis Pharma
Assuming the 90 days trading horizon Warner Music is expected to generate 2.8 times less return on investment than Ascendis Pharma. But when comparing it to its historical volatility, Warner Music Group is 1.41 times less risky than Ascendis Pharma. It trades about 0.14 of its potential returns per unit of risk. Ascendis Pharma AS is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,840 in Ascendis Pharma AS on September 1, 2024 and sell it today you would earn a total of 655.00 from holding Ascendis Pharma AS or generate 13.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Warner Music Group vs. Ascendis Pharma AS
Performance |
| Timeline |
| Warner Music Group |
| Ascendis Pharma AS |
Warner Music and Ascendis Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Ascendis Pharma
The main advantage of trading using opposite Warner Music and Ascendis Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Ascendis Pharma 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 Ascendis Pharma will offset losses from the drop in Ascendis Pharma's long position.| Warner Music vs. Intelbras SA | Warner Music vs. Neogrid Participaes SA | Warner Music vs. Mliuz SA | Warner Music vs. Locaweb Servios de |
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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