Correlation Between Warner Music and Lupatech
Can any of the company-specific risk be diversified away by investing in both Warner Music and Lupatech 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 Lupatech 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 Lupatech SA, you can compare the effects of market volatilities on Warner Music and Lupatech 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 Lupatech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Lupatech.
Diversification Opportunities for Warner Music and Lupatech
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Warner and Lupatech is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Lupatech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lupatech SA 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 Lupatech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lupatech SA has no effect on the direction of Warner Music i.e., Warner Music and Lupatech go up and down completely randomly.
Pair Corralation between Warner Music and Lupatech
Assuming the 90 days trading horizon Warner Music Group is expected to generate 0.47 times more return on investment than Lupatech. However, Warner Music Group is 2.11 times less risky than Lupatech. It trades about 0.18 of its potential returns per unit of risk. Lupatech SA is currently generating about -0.15 per unit of risk. If you would invest 4,618 in Warner Music Group on September 4, 2024 and sell it today you would earn a total of 257.00 from holding Warner Music Group or generate 5.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Warner Music Group vs. Lupatech SA
Performance |
| Timeline |
| Warner Music Group |
| Lupatech SA |
Warner Music and Lupatech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Lupatech
The main advantage of trading using opposite Warner Music and Lupatech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Lupatech 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 Lupatech will offset losses from the drop in Lupatech's long position.| Warner Music vs. Lupatech SA | Warner Music vs. Mitsubishi UFJ Financial | Warner Music vs. Credit Acceptance | Warner Music vs. Bio Techne |
| Lupatech vs. Fundo de Investimento | Lupatech vs. Fator IFIX Fundo | Lupatech vs. Fator IFIX Fundo | Lupatech vs. Domo Fundo de |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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