Correlation Between Warner Music and Intel
Can any of the company-specific risk be diversified away by investing in both Warner Music and Intel 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 Intel 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 Intel, you can compare the effects of market volatilities on Warner Music and Intel 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 Intel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Intel.
Diversification Opportunities for Warner Music and Intel
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Warner and Intel is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Intel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intel 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 Intel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intel has no effect on the direction of Warner Music i.e., Warner Music and Intel go up and down completely randomly.
Pair Corralation between Warner Music and Intel
Assuming the 90 days horizon Warner Music Group is expected to under-perform the Intel. But the stock apears to be less risky and, when comparing its historical volatility, Warner Music Group is 1.78 times less risky than Intel. The stock trades about -0.01 of its potential returns per unit of risk. The Intel is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,133 in Intel on August 27, 2024 and sell it today you would earn a total of 200.00 from holding Intel or generate 9.38% 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. Intel
Performance |
| Timeline |
| Warner Music Group |
| Intel |
Warner Music and Intel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Intel
The main advantage of trading using opposite Warner Music and Intel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Intel 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 Intel will offset losses from the drop in Intel's long position.| Warner Music vs. Dairy Farm International | Warner Music vs. Spirent Communications plc | Warner Music vs. Highlight Communications AG | Warner Music vs. AUSTEVOLL SEAFOOD |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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