Correlation Between Caledonia Mining and Universal Music
Can any of the company-specific risk be diversified away by investing in both Caledonia Mining and Universal 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 Caledonia Mining and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Mining and Universal Music Group, you can compare the effects of market volatilities on Caledonia Mining and Universal 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 Caledonia Mining with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Mining and Universal Music.
Diversification Opportunities for Caledonia Mining and Universal Music
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Caledonia and Universal is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Mining and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group and Caledonia Mining 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 Caledonia Mining are associated (or correlated) with Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Caledonia Mining i.e., Caledonia Mining and Universal Music go up and down completely randomly.
Pair Corralation between Caledonia Mining and Universal Music
Assuming the 90 days trading horizon Caledonia Mining is expected to under-perform the Universal Music. In addition to that, Caledonia Mining is 2.03 times more volatile than Universal Music Group. It trades about -0.09 of its total potential returns per unit of risk. Universal Music Group is currently generating about 0.07 per unit of volatility. If you would invest 2,320 in Universal Music Group on September 15, 2024 and sell it today you would earn a total of 126.00 from holding Universal Music Group or generate 5.43% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Caledonia Mining vs. Universal Music Group
Performance |
Timeline |
Caledonia Mining |
Universal Music Group |
Caledonia Mining and Universal Music Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Caledonia Mining and Universal Music
The main advantage of trading using opposite Caledonia Mining and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Mining position performs unexpectedly, Universal 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 Universal Music will offset losses from the drop in Universal Music's long position.Caledonia Mining vs. Givaudan SA | ||
Caledonia Mining vs. Antofagasta PLC | ||
Caledonia Mining vs. Ferrexpo PLC | ||
Caledonia Mining vs. Atalaya Mining |
Universal Music vs. Samsung Electronics Co | ||
Universal Music vs. Samsung Electronics Co | ||
Universal Music vs. Hyundai Motor | ||
Universal Music vs. Reliance Industries Ltd |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |