Correlation Between Warner Music and ViacomCBS
Can any of the company-specific risk be diversified away by investing in both Warner Music and ViacomCBS 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 ViacomCBS 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 ViacomCBS, you can compare the effects of market volatilities on Warner Music and ViacomCBS 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 ViacomCBS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and ViacomCBS.
Diversification Opportunities for Warner Music and ViacomCBS
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Warner and ViacomCBS is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and ViacomCBS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViacomCBS 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 ViacomCBS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViacomCBS has no effect on the direction of Warner Music i.e., Warner Music and ViacomCBS go up and down completely randomly.
Pair Corralation between Warner Music and ViacomCBS
Assuming the 90 days horizon Warner Music Group is expected to generate 4.27 times more return on investment than ViacomCBS. However, Warner Music is 4.27 times more volatile than ViacomCBS. It trades about 0.03 of its potential returns per unit of risk. ViacomCBS is currently generating about 0.12 per unit of risk. If you would invest 2,986 in Warner Music Group on November 3, 2024 and sell it today you would earn a total of 30.00 from holding Warner Music Group or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. ViacomCBS
Performance |
| Timeline |
| Warner Music Group |
| ViacomCBS |
Warner Music and ViacomCBS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and ViacomCBS
The main advantage of trading using opposite Warner Music and ViacomCBS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, ViacomCBS 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 ViacomCBS will offset losses from the drop in ViacomCBS's long position.| Warner Music vs. Autohome ADR | Warner Music vs. INVITATION HOMES DL | Warner Music vs. MEDICAL FACILITIES NEW | Warner Music vs. ADDUS HOMECARE |
| ViacomCBS vs. Daito Trust Construction | ViacomCBS vs. AWILCO DRILLING PLC | ViacomCBS vs. Luckin Coffee | ViacomCBS vs. SWISS WATER DECAFFCOFFEE |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |