Correlation Between Warner Music and Brunswick
Can any of the company-specific risk be diversified away by investing in both Warner Music and Brunswick 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 Brunswick 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 Brunswick, you can compare the effects of market volatilities on Warner Music and Brunswick 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 Brunswick. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Brunswick.
Diversification Opportunities for Warner Music and Brunswick
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Warner and Brunswick is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Brunswick in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brunswick 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 Brunswick. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brunswick has no effect on the direction of Warner Music i.e., Warner Music and Brunswick go up and down completely randomly.
Pair Corralation between Warner Music and Brunswick
Considering the 90-day investment horizon Warner Music Group is expected to generate 0.97 times more return on investment than Brunswick. However, Warner Music Group is 1.03 times less risky than Brunswick. It trades about -0.01 of its potential returns per unit of risk. Brunswick is currently generating about -0.18 per unit of risk. If you would invest 3,280 in Warner Music Group on September 12, 2024 and sell it today you would lose (30.00) from holding Warner Music Group or give up 0.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Brunswick
Performance |
| Timeline |
| Warner Music Group |
| Brunswick |
Warner Music and Brunswick Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Brunswick
The main advantage of trading using opposite Warner Music and Brunswick positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Brunswick 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 Brunswick will offset losses from the drop in Brunswick's long position.| Warner Music vs. Aeye Inc | Warner Music vs. Ep Emerging Markets | Warner Music vs. ALPS Emerging Sector | Warner Music vs. First Physicians Capital |
| Brunswick vs. MCBC Holdings | Brunswick vs. Marine Products | Brunswick vs. Winnebago Industries | Brunswick vs. LCI Industries |
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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