Correlation Between Warner Music and INDOFOOD AGRI
Can any of the company-specific risk be diversified away by investing in both Warner Music and INDOFOOD AGRI 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 INDOFOOD AGRI 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 INDOFOOD AGRI RES, you can compare the effects of market volatilities on Warner Music and INDOFOOD AGRI 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 INDOFOOD AGRI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and INDOFOOD AGRI.
Diversification Opportunities for Warner Music and INDOFOOD AGRI
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Warner and INDOFOOD is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and INDOFOOD AGRI RES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDOFOOD AGRI RES 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 INDOFOOD AGRI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDOFOOD AGRI RES has no effect on the direction of Warner Music i.e., Warner Music and INDOFOOD AGRI go up and down completely randomly.
Pair Corralation between Warner Music and INDOFOOD AGRI
Assuming the 90 days horizon Warner Music Group is expected to generate 0.79 times more return on investment than INDOFOOD AGRI. However, Warner Music Group is 1.26 times less risky than INDOFOOD AGRI. It trades about 0.4 of its potential returns per unit of risk. INDOFOOD AGRI RES is currently generating about -0.14 per unit of risk. If you would invest 2,770 in Warner Music Group on November 27, 2024 and sell it today you would earn a total of 566.00 from holding Warner Music Group or generate 20.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. INDOFOOD AGRI RES
Performance |
| Timeline |
| Warner Music Group |
| INDOFOOD AGRI RES |
Warner Music and INDOFOOD AGRI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and INDOFOOD AGRI
The main advantage of trading using opposite Warner Music and INDOFOOD AGRI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, INDOFOOD AGRI 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 INDOFOOD AGRI will offset losses from the drop in INDOFOOD AGRI's long position.| Warner Music vs. THAI BEVERAGE | Warner Music vs. United Breweries Co | Warner Music vs. Chengdu PUTIAN Telecommunications | Warner Music vs. China Resources Beer |
| INDOFOOD AGRI vs. THAI BEVERAGE | INDOFOOD AGRI vs. BIOPHARMA CREDIT DL | INDOFOOD AGRI vs. Carnegie Clean Energy | INDOFOOD AGRI vs. Discover Financial Services |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |