Correlation Between Warner Music and Zijin Mining
Can any of the company-specific risk be diversified away by investing in both Warner Music and Zijin Mining 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 Zijin Mining 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 Zijin Mining Group, you can compare the effects of market volatilities on Warner Music and Zijin Mining 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 Zijin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warner Music and Zijin Mining.
Diversification Opportunities for Warner Music and Zijin Mining
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Warner and Zijin is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Zijin Mining Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zijin Mining Group 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 Zijin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zijin Mining Group has no effect on the direction of Warner Music i.e., Warner Music and Zijin Mining go up and down completely randomly.
Pair Corralation between Warner Music and Zijin Mining
Considering the 90-day investment horizon Warner Music Group is expected to generate 0.36 times more return on investment than Zijin Mining. However, Warner Music Group is 2.75 times less risky than Zijin Mining. It trades about 0.04 of its potential returns per unit of risk. Zijin Mining Group is currently generating about 0.0 per unit of risk. If you would invest 3,076 in Warner Music Group on September 1, 2024 and sell it today you would earn a total of 176.00 from holding Warner Music Group or generate 5.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.41% |
| Values | Daily Returns |
Warner Music Group vs. Zijin Mining Group
Performance |
| Timeline |
| Warner Music Group |
| Zijin Mining Group |
Warner Music and Zijin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warner Music and Zijin Mining
The main advantage of trading using opposite Warner Music and Zijin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Music position performs unexpectedly, Zijin Mining 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 Zijin Mining will offset losses from the drop in Zijin Mining's long position.| Warner Music vs. ADTRAN Inc | Warner Music vs. Belden Inc | Warner Music vs. ADC Therapeutics SA | Warner Music vs. Comtech Telecommunications Corp |
| Zijin Mining vs. Aurion Resources | Zijin Mining vs. Rio2 Limited | Zijin Mining vs. Palamina Corp | Zijin Mining vs. BTU Metals Corp |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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