Correlation Between Warner Music and Kura Sushi
Can any of the company-specific risk be diversified away by investing in both Warner Music and Kura Sushi 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 Kura Sushi 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 Kura Sushi USA, you can compare the effects of market volatilities on Warner Music and Kura Sushi 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 Kura Sushi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Kura Sushi.
Diversification Opportunities for Warner Music and Kura Sushi
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Warner and Kura is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Kura Sushi USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kura Sushi USA 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 Kura Sushi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kura Sushi USA has no effect on the direction of Warner Music i.e., Warner Music and Kura Sushi go up and down completely randomly.
Pair Corralation between Warner Music and Kura Sushi
Considering the 90-day investment horizon Warner Music is expected to generate 2.48 times less return on investment than Kura Sushi. But when comparing it to its historical volatility, Warner Music Group is 2.32 times less risky than Kura Sushi. It trades about 0.02 of its potential returns per unit of risk. Kura Sushi USA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 9,533 in Kura Sushi USA on September 12, 2024 and sell it today you would earn a total of 506.00 from holding Kura Sushi USA or generate 5.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Kura Sushi USA
Performance |
| Timeline |
| Warner Music Group |
| Kura Sushi USA |
Warner Music and Kura Sushi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Kura Sushi
The main advantage of trading using opposite Warner Music and Kura Sushi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Kura Sushi 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 Kura Sushi will offset losses from the drop in Kura Sushi'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 |
| Kura Sushi vs. Noble Romans | Kura Sushi vs. Good Times Restaurants | Kura Sushi vs. Flanigans Enterprises | Kura Sushi vs. FAT Brands |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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