Correlation Between Warner Music and Kite Realty
Can any of the company-specific risk be diversified away by investing in both Warner Music and Kite Realty 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 Kite Realty 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 Kite Realty Group, you can compare the effects of market volatilities on Warner Music and Kite Realty 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 Kite Realty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Kite Realty.
Diversification Opportunities for Warner Music and Kite Realty
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Warner and Kite is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Kite Realty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kite Realty Group 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 Kite Realty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kite Realty Group has no effect on the direction of Warner Music i.e., Warner Music and Kite Realty go up and down completely randomly.
Pair Corralation between Warner Music and Kite Realty
Considering the 90-day investment horizon Warner Music Group is expected to generate 2.34 times more return on investment than Kite Realty. However, Warner Music is 2.34 times more volatile than Kite Realty Group. It trades about 0.0 of its potential returns per unit of risk. Kite Realty Group is currently generating about -0.2 per unit of risk. If you would invest 3,267 in Warner Music Group on September 13, 2024 and sell it today you would lose (8.00) from holding Warner Music Group or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Kite Realty Group
Performance |
| Timeline |
| Warner Music Group |
| Kite Realty Group |
Warner Music and Kite Realty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Kite Realty
The main advantage of trading using opposite Warner Music and Kite Realty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Kite Realty 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 Kite Realty will offset losses from the drop in Kite Realty's long position.| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
| Kite Realty vs. Site Centers Corp | Kite Realty vs. CBL Associates Properties | Kite Realty vs. Urban Edge Properties | Kite Realty vs. Acadia Realty Trust |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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