Correlation Between Warner Music and China Aircraft
Can any of the company-specific risk be diversified away by investing in both Warner Music and China Aircraft 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 China Aircraft 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 China Aircraft Leasing, you can compare the effects of market volatilities on Warner Music and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and China Aircraft.
Diversification Opportunities for Warner Music and China Aircraft
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Warner and China is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of Warner Music i.e., Warner Music and China Aircraft go up and down completely randomly.
Pair Corralation between Warner Music and China Aircraft
If you would invest 3,186 in Warner Music Group on August 28, 2024 and sell it today you would earn a total of 19.00 from holding Warner Music Group or generate 0.6% 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. China Aircraft Leasing
Performance |
| Timeline |
| Warner Music Group |
| China Aircraft Leasing |
Warner Music and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and China Aircraft
The main advantage of trading using opposite Warner Music and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
| China Aircraft vs. Grocery Outlet Holding | China Aircraft vs. Turning Point Brands | China Aircraft vs. Marfrig Global Foods | China Aircraft vs. FitLife Brands, Common |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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