Correlation Between Universal Music and Ion Beam
Can any of the company-specific risk be diversified away by investing in both Universal Music and Ion Beam 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 Universal Music and Ion Beam into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and Ion Beam Applications, you can compare the effects of market volatilities on Universal Music and Ion Beam 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 Universal Music with a short position of Ion Beam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Ion Beam.
Diversification Opportunities for Universal Music and Ion Beam
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Ion is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Ion Beam Applications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ion Beam Applications and Universal 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 Universal Music Group are associated (or correlated) with Ion Beam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ion Beam Applications has no effect on the direction of Universal Music i.e., Universal Music and Ion Beam go up and down completely randomly.
Pair Corralation between Universal Music and Ion Beam
Assuming the 90 days trading horizon Universal Music Group is expected to generate 0.63 times more return on investment than Ion Beam. However, Universal Music Group is 1.58 times less risky than Ion Beam. It trades about 0.07 of its potential returns per unit of risk. Ion Beam Applications is currently generating about -0.09 per unit of risk. If you would invest 2,364 in Universal Music Group on October 22, 2024 and sell it today you would earn a total of 109.00 from holding Universal Music Group or generate 4.61% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Universal Music Group vs. Ion Beam Applications
Performance |
Timeline |
Universal Music Group |
Ion Beam Applications |
Universal Music and Ion Beam Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Universal Music and Ion Beam
The main advantage of trading using opposite Universal Music and Ion Beam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Ion Beam 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 Ion Beam will offset losses from the drop in Ion Beam's long position.Universal Music vs. Sabre Insurance Group | Universal Music vs. Pets at Home | Universal Music vs. Gaztransport et Technigaz | Universal Music vs. Beazer Homes USA |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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