Correlation Between Warner Music and Marcus
Can any of the company-specific risk be diversified away by investing in both Warner Music and Marcus 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 Marcus 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 Marcus, you can compare the effects of market volatilities on Warner Music and Marcus 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 Marcus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Marcus.
Diversification Opportunities for Warner Music and Marcus
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Warner and Marcus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Marcus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marcus 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 Marcus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marcus has no effect on the direction of Warner Music i.e., Warner Music and Marcus go up and down completely randomly.
Pair Corralation between Warner Music and Marcus
Considering the 90-day investment horizon Warner Music Group is expected to generate 1.29 times more return on investment than Marcus. However, Warner Music is 1.29 times more volatile than Marcus. It trades about -0.05 of its potential returns per unit of risk. Marcus is currently generating about -0.34 per unit of risk. If you would invest 3,073 in Warner Music Group on October 20, 2024 and sell it today you would lose (49.00) from holding Warner Music Group or give up 1.59% 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. Marcus
Performance |
| Timeline |
| Warner Music Group |
| Marcus |
Warner Music and Marcus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Marcus
The main advantage of trading using opposite Warner Music and Marcus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Marcus 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 Marcus will offset losses from the drop in Marcus' long position.| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
| Marcus vs. News Corp A | Marcus vs. Liberty Media | Marcus vs. Warner Music Group | Marcus vs. Fox Corp Class |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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