Correlation Between Warner Music and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both Warner Music and Zurich Insurance 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 Zurich Insurance 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 Zurich Insurance Group, you can compare the effects of market volatilities on Warner Music and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Zurich Insurance.
Diversification Opportunities for Warner Music and Zurich Insurance
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warner and Zurich is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of Warner Music i.e., Warner Music and Zurich Insurance go up and down completely randomly.
Pair Corralation between Warner Music and Zurich Insurance
Assuming the 90 days horizon Warner Music Group is expected to generate 0.86 times more return on investment than Zurich Insurance. However, Warner Music Group is 1.17 times less risky than Zurich Insurance. It trades about 0.1 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about 0.04 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Zurich Insurance Group
Performance |
| Timeline |
| Warner Music Group |
| Zurich Insurance |
Warner Music and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Zurich Insurance
The main advantage of trading using opposite Warner Music and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance'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 |
| Zurich Insurance vs. Magic Software Enterprises | Zurich Insurance vs. ATOSS SOFTWARE | Zurich Insurance vs. Guidewire Software | Zurich Insurance vs. Aegean Airlines 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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