Correlation Between Warner Music and AFFLUENT MEDICAL
Can any of the company-specific risk be diversified away by investing in both Warner Music and AFFLUENT MEDICAL 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 AFFLUENT MEDICAL 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 AFFLUENT MEDICAL SAS, you can compare the effects of market volatilities on Warner Music and AFFLUENT MEDICAL 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 AFFLUENT MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and AFFLUENT MEDICAL.
Diversification Opportunities for Warner Music and AFFLUENT MEDICAL
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Warner and AFFLUENT is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and AFFLUENT MEDICAL SAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AFFLUENT MEDICAL SAS 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 AFFLUENT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AFFLUENT MEDICAL SAS has no effect on the direction of Warner Music i.e., Warner Music and AFFLUENT MEDICAL go up and down completely randomly.
Pair Corralation between Warner Music and AFFLUENT MEDICAL
Assuming the 90 days horizon Warner Music Group is expected to under-perform the AFFLUENT MEDICAL. But the stock apears to be less risky and, when comparing its historical volatility, Warner Music Group is 2.44 times less risky than AFFLUENT MEDICAL. The stock trades about -0.14 of its potential returns per unit of risk. The AFFLUENT MEDICAL SAS is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 126.00 in AFFLUENT MEDICAL SAS on October 29, 2024 and sell it today you would lose (1.00) from holding AFFLUENT MEDICAL SAS or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. AFFLUENT MEDICAL SAS
Performance |
| Timeline |
| Warner Music Group |
| AFFLUENT MEDICAL SAS |
Warner Music and AFFLUENT MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and AFFLUENT MEDICAL
The main advantage of trading using opposite Warner Music and AFFLUENT MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, AFFLUENT MEDICAL 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 AFFLUENT MEDICAL will offset losses from the drop in AFFLUENT MEDICAL's long position.| Warner Music vs. HEALTHSTREAM | Warner Music vs. Planet Fitness | Warner Music vs. Siemens Healthineers AG | Warner Music vs. PURETECH HEALTH PLC |
| AFFLUENT MEDICAL vs. Apple Inc | AFFLUENT MEDICAL vs. Apple Inc | AFFLUENT MEDICAL vs. Apple Inc | AFFLUENT MEDICAL vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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