Correlation Between Warner Music and Afya
Can any of the company-specific risk be diversified away by investing in both Warner Music and Afya 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 Afya 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 Afya, you can compare the effects of market volatilities on Warner Music and Afya 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 Afya. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Afya.
Diversification Opportunities for Warner Music and Afya
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Warner and Afya is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Afya in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Afya 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 Afya. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Afya has no effect on the direction of Warner Music i.e., Warner Music and Afya go up and down completely randomly.
Pair Corralation between Warner Music and Afya
Considering the 90-day investment horizon Warner Music Group is expected to generate 0.88 times more return on investment than Afya. However, Warner Music Group is 1.14 times less risky than Afya. It trades about 0.03 of its potential returns per unit of risk. Afya is currently generating about 0.0 per unit of risk. If you would invest 3,180 in Warner Music Group on August 31, 2024 and sell it today you would earn a total of 30.00 from holding Warner Music Group or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Afya
Performance |
| Timeline |
| Warner Music Group |
| Afya |
Warner Music and Afya Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Afya
The main advantage of trading using opposite Warner Music and Afya positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Afya 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 Afya will offset losses from the drop in Afya's long position.| Warner Music vs. Roku Inc | Warner Music vs. AMC Entertainment Holdings | Warner Music vs. Paramount Global Class | Warner Music vs. Warner Bros Discovery |
| Afya vs. Lincoln Educational Services | Afya vs. Aquagold International | Afya vs. Thrivent High Yield | Afya vs. Morningstar Unconstrained Allocation |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |