Correlation Between Warner Music and Southern Copper
Can any of the company-specific risk be diversified away by investing in both Warner Music and Southern Copper 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 Southern Copper 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 Southern Copper, you can compare the effects of market volatilities on Warner Music and Southern Copper 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 Southern Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Southern Copper.
Diversification Opportunities for Warner Music and Southern Copper
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Warner and Southern is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Southern Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Copper 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 Southern Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Copper has no effect on the direction of Warner Music i.e., Warner Music and Southern Copper go up and down completely randomly.
Pair Corralation between Warner Music and Southern Copper
Assuming the 90 days horizon Warner Music Group is expected to generate 0.72 times more return on investment than Southern Copper. However, Warner Music Group is 1.38 times less risky than Southern Copper. It trades about 0.1 of its potential returns per unit of risk. Southern Copper is currently generating about 0.02 per unit of risk. If you would invest 2,547 in Warner Music Group on November 2, 2024 and sell it today you would earn a total of 468.00 from holding Warner Music Group or generate 18.37% 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. Southern Copper
Performance |
| Timeline |
| Warner Music Group |
| Southern Copper |
Warner Music and Southern Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Southern Copper
The main advantage of trading using opposite Warner Music and Southern Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Southern Copper 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 Southern Copper will offset losses from the drop in Southern Copper's long position.| Warner Music vs. Universal Health Realty | Warner Music vs. Charter Communications | Warner Music vs. Phibro Animal Health | Warner Music vs. RCI Hospitality Holdings |
| Southern Copper vs. SEALED AIR | Southern Copper vs. SANOK RUBBER ZY | Southern Copper vs. THRACE PLASTICS | Southern Copper vs. LAir Liquide SA |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |