Correlation Between Warner Music and Metro AG
Can any of the company-specific risk be diversified away by investing in both Warner Music and Metro AG 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 Metro AG 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 Metro AG, you can compare the effects of market volatilities on Warner Music and Metro AG 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 Metro AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Metro AG.
Diversification Opportunities for Warner Music and Metro AG
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Warner and Metro is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Metro AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro AG 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 Metro AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro AG has no effect on the direction of Warner Music i.e., Warner Music and Metro AG go up and down completely randomly.
Pair Corralation between Warner Music and Metro AG
Assuming the 90 days horizon Warner Music Group is expected to generate 0.52 times more return on investment than Metro AG. However, Warner Music Group is 1.91 times less risky than Metro AG. It trades about 0.2 of its potential returns per unit of risk. Metro AG is currently generating about 0.02 per unit of risk. If you would invest 2,528 in Warner Music Group on September 12, 2024 and sell it today you would earn a total of 531.00 from holding Warner Music Group or generate 21.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Metro AG
Performance |
| Timeline |
| Warner Music Group |
| Metro AG |
Warner Music and Metro AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Metro AG
The main advantage of trading using opposite Warner Music and Metro AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Metro AG 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 Metro AG will offset losses from the drop in Metro AG's long position.| Warner Music vs. The Walt Disney | Warner Music vs. Charter Communications | Warner Music vs. Superior Plus Corp | Warner Music vs. SIVERS SEMICONDUCTORS AB |
| Metro AG vs. Superior Plus Corp | Metro AG vs. SIVERS SEMICONDUCTORS AB | Metro AG vs. NorAm Drilling AS | Metro AG vs. BANK HANDLOWY |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
Other Complementary Tools
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Pattern Recognition Use different Pattern Recognition models to time the market across multiple global exchanges | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |