Correlation Between Warner Music and UnitedHealth Group
Can any of the company-specific risk be diversified away by investing in both Warner Music and UnitedHealth Group 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 UnitedHealth Group 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 UnitedHealth Group Incorporated, you can compare the effects of market volatilities on Warner Music and UnitedHealth Group 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 UnitedHealth Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and UnitedHealth Group.
Diversification Opportunities for Warner Music and UnitedHealth Group
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Warner and UnitedHealth is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and UnitedHealth Group Incorporate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UnitedHealth Group 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 UnitedHealth Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UnitedHealth Group has no effect on the direction of Warner Music i.e., Warner Music and UnitedHealth Group go up and down completely randomly.
Pair Corralation between Warner Music and UnitedHealth Group
Assuming the 90 days trading horizon Warner Music Group is expected to generate 0.68 times more return on investment than UnitedHealth Group. However, Warner Music Group is 1.48 times less risky than UnitedHealth Group. It trades about 0.09 of its potential returns per unit of risk. UnitedHealth Group Incorporated is currently generating about -0.09 per unit of risk. If you would invest 4,753 in Warner Music Group on September 12, 2024 and sell it today you would earn a total of 134.00 from holding Warner Music Group or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. UnitedHealth Group Incorporate
Performance |
| Timeline |
| Warner Music Group |
| UnitedHealth Group |
Warner Music and UnitedHealth Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and UnitedHealth Group
The main advantage of trading using opposite Warner Music and UnitedHealth Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, UnitedHealth Group 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 UnitedHealth Group will offset losses from the drop in UnitedHealth Group's long position.| Warner Music vs. Livetech da Bahia | Warner Music vs. GX AI TECH | Warner Music vs. Charter Communications | Warner Music vs. Spotify Technology SA |
| UnitedHealth Group vs. Odontoprev SA | UnitedHealth Group vs. Qualicorp Consultoria e | UnitedHealth Group vs. Fundo Investimento Imobiliario | UnitedHealth Group vs. LESTE FDO INV |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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