Correlation Between CRISPR Therapeutics and Warner Music

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

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

Diversification Opportunities for CRISPR Therapeutics and Warner Music

0.57

Correlation Coefficient

CRISPR Therapeutics  Warner Music

Very weak diversification

The 3 months correlation between CRISPR and Warner is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding CRISPR Therapeutics AG and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner Music Group and CRISPR Therapeutics 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 CRISPR Therapeutics AG are associated (or correlated) with Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of CRISPR Therapeutics i.e., CRISPR Therapeutics and Warner Music go up and down completely randomly.

Pair Corralation between CRISPR Therapeutics and Warner Music

Assuming the 90 days trading horizon CRISPR Therapeutics AG is expected to generate 2.53 times more return on investment than Warner Music. However, CRISPR Therapeutics is 2.53 times more volatile than Warner Music Group. It trades about -0.01 of its potential returns per unit of risk. Warner Music Group is currently generating about -0.12 per unit of risk. If you would invest  3,132  in CRISPR Therapeutics AG on October 22, 2024 and sell it today you would lose (66.00) from holding CRISPR Therapeutics AG or give up 2.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.12%
Values	Daily Returns

CRISPR Therapeutics AG  vs.  Warner Music Group

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRISPR Therapeutics AG 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.

Warner Music Group

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Music Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong primary indicators, Warner Music is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CRISPR Therapeutics and Warner Music

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

The idea behind CRISPR Therapeutics AG and Warner Music Group 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.