Correlation Between Genie Music and Nature

Can any of the company-specific risk be diversified away by investing in both Genie Music and Nature 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 Genie Music and Nature into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genie Music and Nature and Environment, you can compare the effects of market volatilities on Genie Music and Nature 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 Genie Music with a short position of Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genie Music and Nature.

Diversification Opportunities for Genie Music and Nature

0.55

Correlation Coefficient

Genie Music  Nature

Very weak diversification

The 3 months correlation between Genie and Nature is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Genie Music and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment and Genie 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 Genie Music are associated (or correlated) with Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of Genie Music i.e., Genie Music and Nature go up and down completely randomly.

Pair Corralation between Genie Music and Nature

Assuming the 90 days trading horizon Genie Music is expected to under-perform the Nature. But the stock apears to be less risky and, when comparing its historical volatility, Genie Music is 1.08 times less risky than Nature. The stock trades about -0.02 of its potential returns per unit of risk. The Nature and Environment is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  98,734  in Nature and Environment on September 30, 2024 and sell it today you would lose (39,934) from holding Nature and Environment or give up 40.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Genie Music  vs.  Nature and Environment

Genie Music

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genie Music has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nature and Environment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nature and Environment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Genie Music and Nature

The main advantage of trading using opposite Genie Music and Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genie Music position performs unexpectedly, Nature 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 Nature will offset losses from the drop in Nature's long position.

The idea behind Genie Music and Nature and Environment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.