Correlation Between Warner Music and Onyx Acquisition
Can any of the company-specific risk be diversified away by investing in both Warner Music and Onyx Acquisition 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 Onyx Acquisition 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 Onyx Acquisition Co, you can compare the effects of market volatilities on Warner Music and Onyx Acquisition 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 Onyx Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Onyx Acquisition.
Diversification Opportunities for Warner Music and Onyx Acquisition
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Warner and Onyx is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Onyx Acquisition Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onyx Acquisition 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 Onyx Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onyx Acquisition has no effect on the direction of Warner Music i.e., Warner Music and Onyx Acquisition go up and down completely randomly.
Pair Corralation between Warner Music and Onyx Acquisition
If you would invest 3,267 in Warner Music Group on September 13, 2024 and sell it today you would earn a total of 7.00 from holding Warner Music Group or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Warner Music Group vs. Onyx Acquisition Co
Performance |
| Timeline |
| Warner Music Group |
| Onyx Acquisition |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Warner Music and Onyx Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Onyx Acquisition
The main advantage of trading using opposite Warner Music and Onyx Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Onyx Acquisition 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 Onyx Acquisition will offset losses from the drop in Onyx Acquisition's long position.| Warner Music vs. Liberty Media | Warner Music vs. Atlanta Braves Holdings, | Warner Music vs. News Corp B | Warner Music vs. News Corp A |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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