Correlation Between Warner Music and KKR Co
Can any of the company-specific risk be diversified away by investing in both Warner Music and KKR Co 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 KKR Co 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 KKR Co LP, you can compare the effects of market volatilities on Warner Music and KKR Co 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 KKR Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and KKR Co.
Diversification Opportunities for Warner Music and KKR Co
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Warner and KKR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and KKR Co LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KKR Co LP 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 KKR Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KKR Co LP has no effect on the direction of Warner Music i.e., Warner Music and KKR Co go up and down completely randomly.
Pair Corralation between Warner Music and KKR Co
Assuming the 90 days horizon Warner Music Group is expected to under-perform the KKR Co. In addition to that, Warner Music is 1.16 times more volatile than KKR Co LP. It trades about -0.1 of its total potential returns per unit of risk. KKR Co LP is currently generating about -0.02 per unit of volatility. If you would invest 14,100 in KKR Co LP on October 16, 2024 and sell it today you would lose (250.00) from holding KKR Co LP or give up 1.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. KKR Co LP
Performance |
| Timeline |
| Warner Music Group |
| KKR Co LP |
Warner Music and KKR Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and KKR Co
The main advantage of trading using opposite Warner Music and KKR Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, KKR Co 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 KKR Co will offset losses from the drop in KKR Co's long position.| Warner Music vs. COFCO Joycome Foods | Warner Music vs. FIREWEED METALS P | Warner Music vs. GREENX METALS LTD | Warner Music vs. MTY Food Group |
| KKR Co vs. OURGAME INTHOLDL 00005 | KKR Co vs. Warner Music Group | KKR Co vs. ITALIAN WINE BRANDS | KKR Co vs. HOCHSCHILD MINING |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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