Correlation Between Warner Music and Macquarie Group
Can any of the company-specific risk be diversified away by investing in both Warner Music and Macquarie 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 Macquarie 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 Macquarie Group Limited, you can compare the effects of market volatilities on Warner Music and Macquarie 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 Macquarie Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Macquarie Group.
Diversification Opportunities for Warner Music and Macquarie Group
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Warner and Macquarie is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Macquarie Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie 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 Macquarie Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie Group has no effect on the direction of Warner Music i.e., Warner Music and Macquarie Group go up and down completely randomly.
Pair Corralation between Warner Music and Macquarie Group
Assuming the 90 days horizon Warner Music Group is expected to generate 1.15 times more return on investment than Macquarie Group. However, Warner Music is 1.15 times more volatile than Macquarie Group Limited. It trades about 0.2 of its potential returns per unit of risk. Macquarie Group Limited is currently generating about -0.19 per unit of risk. If you would invest 3,028 in Warner Music Group on December 4, 2024 and sell it today you would earn a total of 214.00 from holding Warner Music Group or generate 7.07% 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. Macquarie Group Limited
Performance |
| Timeline |
| Warner Music Group |
| Macquarie Group |
Warner Music and Macquarie Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Macquarie Group
The main advantage of trading using opposite Warner Music and Macquarie Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Macquarie 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 Macquarie Group will offset losses from the drop in Macquarie Group's long position.| Warner Music vs. Hisense Home Appliances | Warner Music vs. CAIRN HOMES EO | Warner Music vs. DeVry Education Group | Warner Music vs. betterU Education Corp |
| Macquarie Group vs. Take Two Interactive Software | Macquarie Group vs. Calibre Mining Corp | Macquarie Group vs. Carnegie Clean Energy | Macquarie Group vs. FORMPIPE SOFTWARE AB |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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