Correlation Between Warner Music and Shenzhen Investment
Can any of the company-specific risk be diversified away by investing in both Warner Music and Shenzhen Investment 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 Shenzhen Investment 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 Shenzhen Investment Holdings, you can compare the effects of market volatilities on Warner Music and Shenzhen Investment 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 Shenzhen Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Shenzhen Investment.
Diversification Opportunities for Warner Music and Shenzhen Investment
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Warner and Shenzhen is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Shenzhen Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen Investment 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 Shenzhen Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen Investment has no effect on the direction of Warner Music i.e., Warner Music and Shenzhen Investment go up and down completely randomly.
Pair Corralation between Warner Music and Shenzhen Investment
If you would invest 3,102 in Warner Music Group on November 4, 2024 and sell it today you would earn a total of 78.00 from holding Warner Music Group or generate 2.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.0% |
| Values | Daily Returns |
Warner Music Group vs. Shenzhen Investment Holdings
Performance |
| Timeline |
| Warner Music Group |
| Shenzhen Investment |
Warner Music and Shenzhen Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Shenzhen Investment
The main advantage of trading using opposite Warner Music and Shenzhen Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Shenzhen Investment 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 Shenzhen Investment will offset losses from the drop in Shenzhen Investment's long position.| Warner Music vs. News Corp A | Warner Music vs. Marcus | Warner Music vs. Liberty Media | Warner Music vs. Fox Corp Class |
| Shenzhen Investment vs. Jiangsu Expressway Co | Shenzhen Investment vs. Jiangsu Expressway | Shenzhen Investment vs. Zhejiang Expressway Co | Shenzhen Investment vs. Yuexiu Transport Infrastructure |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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