Correlation Between Warner Music and Valneva SE
Can any of the company-specific risk be diversified away by investing in both Warner Music and Valneva SE 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 Valneva SE 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 Valneva SE ADR, you can compare the effects of market volatilities on Warner Music and Valneva SE 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 Valneva SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Valneva SE.
Diversification Opportunities for Warner Music and Valneva SE
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Warner and Valneva is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE ADR 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of Warner Music i.e., Warner Music and Valneva SE go up and down completely randomly.
Pair Corralation between Warner Music and Valneva SE
Considering the 90-day investment horizon Warner Music Group is expected to generate 0.54 times more return on investment than Valneva SE. However, Warner Music Group is 1.85 times less risky than Valneva SE. It trades about 0.02 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.1 per unit of risk. If you would invest 2,961 in Warner Music Group on September 12, 2024 and sell it today you would earn a total of 256.00 from holding Warner Music Group or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warner Music Group vs. Valneva SE ADR
Performance |
| Timeline |
| Warner Music Group |
| Valneva SE ADR |
Warner Music and Valneva SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Valneva SE
The main advantage of trading using opposite Warner Music and Valneva SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Valneva SE 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 Valneva SE will offset losses from the drop in Valneva SE'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 |
| Valneva SE vs. NuCana PLC | Valneva SE vs. Sage Therapeutic | Valneva SE vs. Sellas Life Sciences | Valneva SE vs. Third Harmonic Bio |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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