Correlation Between Warner Music and AGF Management
Can any of the company-specific risk be diversified away by investing in both Warner Music and AGF Management 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 AGF Management 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 AGF Management Limited, you can compare the effects of market volatilities on Warner Music and AGF Management 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 AGF Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and AGF Management.
Diversification Opportunities for Warner Music and AGF Management
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Warner and AGF is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and AGF Management Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AGF Management 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 AGF Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AGF Management has no effect on the direction of Warner Music i.e., Warner Music and AGF Management go up and down completely randomly.
Pair Corralation between Warner Music and AGF Management
Assuming the 90 days horizon Warner Music is expected to generate 6.84 times less return on investment than AGF Management. But when comparing it to its historical volatility, Warner Music Group is 1.02 times less risky than AGF Management. It trades about 0.01 of its potential returns per unit of risk. AGF Management Limited is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 395.00 in AGF Management Limited on September 4, 2024 and sell it today you would earn a total of 345.00 from holding AGF Management Limited or generate 87.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. AGF Management Limited
Performance |
| Timeline |
| Warner Music Group |
| AGF Management |
Warner Music and AGF Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and AGF Management
The main advantage of trading using opposite Warner Music and AGF Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, AGF Management 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 AGF Management will offset losses from the drop in AGF Management's long position.The idea behind Warner Music Group and AGF Management Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AGF Management vs. Perma Fix Environmental Services | AGF Management vs. PRECISION DRILLING P | AGF Management vs. American Eagle Outfitters | AGF Management vs. GFL ENVIRONM |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |