Correlation Between Warner Music and Global X
Can any of the company-specific risk be diversified away by investing in both Warner Music and Global X 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 Global X 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 Global X Funds, you can compare the effects of market volatilities on Warner Music and Global X 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 Global X. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Global X.
Diversification Opportunities for Warner Music and Global X
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Warner and Global is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Global X Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Funds 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 Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Funds has no effect on the direction of Warner Music i.e., Warner Music and Global X go up and down completely randomly.
Pair Corralation between Warner Music and Global X
Assuming the 90 days trading horizon Warner Music is expected to generate 1.58 times less return on investment than Global X. In addition to that, Warner Music is 1.1 times more volatile than Global X Funds. It trades about 0.18 of its total potential returns per unit of risk. Global X Funds is currently generating about 0.32 per unit of volatility. If you would invest 4,665 in Global X Funds on September 4, 2024 and sell it today you would earn a total of 425.00 from holding Global X Funds or generate 9.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Global X Funds
Performance |
| Timeline |
| Warner Music Group |
| Global X Funds |
Warner Music and Global X Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Global X
The main advantage of trading using opposite Warner Music and Global X positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Global X 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 Global X will offset losses from the drop in Global X's long position.| Warner Music vs. Lupatech SA | Warner Music vs. Mitsubishi UFJ Financial | Warner Music vs. Credit Acceptance | Warner Music vs. Bio Techne |
| Global X vs. Taiwan Semiconductor Manufacturing | Global X vs. Apple Inc | Global X vs. Alibaba Group Holding | Global X vs. Microsoft |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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