Correlation Between Warner Music and Glaston Oyj
Can any of the company-specific risk be diversified away by investing in both Warner Music and Glaston Oyj 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 Glaston Oyj 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 Glaston Oyj Abp, you can compare the effects of market volatilities on Warner Music and Glaston Oyj 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 Glaston Oyj. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Glaston Oyj.
Diversification Opportunities for Warner Music and Glaston Oyj
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Warner and Glaston is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Glaston Oyj Abp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Glaston Oyj Abp 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 Glaston Oyj. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Glaston Oyj Abp has no effect on the direction of Warner Music i.e., Warner Music and Glaston Oyj go up and down completely randomly.
Pair Corralation between Warner Music and Glaston Oyj
Assuming the 90 days horizon Warner Music is expected to generate 4.78 times less return on investment than Glaston Oyj. But when comparing it to its historical volatility, Warner Music Group is 1.27 times less risky than Glaston Oyj. It trades about 0.01 of its potential returns per unit of risk. Glaston Oyj Abp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 60.00 in Glaston Oyj Abp on September 3, 2024 and sell it today you would earn a total of 11.00 from holding Glaston Oyj Abp or generate 18.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Glaston Oyj Abp
Performance |
| Timeline |
| Warner Music Group |
| Glaston Oyj Abp |
Warner Music and Glaston Oyj Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Glaston Oyj
The main advantage of trading using opposite Warner Music and Glaston Oyj positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Glaston Oyj 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 Glaston Oyj will offset losses from the drop in Glaston Oyj's long position.The idea behind Warner Music Group and Glaston Oyj Abp 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.| Glaston Oyj vs. Molson Coors Beverage | Glaston Oyj vs. BOSTON BEER A | Glaston Oyj vs. GREENX METALS LTD | Glaston Oyj vs. ADRIATIC METALS LS 013355 |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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