Correlation Between Vita Coco and Universal Music
Can any of the company-specific risk be diversified away by investing in both Vita Coco 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 Vita Coco and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vita Coco and Universal Music Group, you can compare the effects of market volatilities on Vita Coco 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 Vita Coco with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vita Coco and Universal Music.
Diversification Opportunities for Vita Coco and Universal Music
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vita and Universal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Vita Coco 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 Vita Coco 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 Vita Coco 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 Vita Coco i.e., Vita Coco and Universal Music go up and down completely randomly.
Pair Corralation between Vita Coco and Universal Music
Given the investment horizon of 90 days Vita Coco is expected to under-perform the Universal Music. But the stock apears to be less risky and, when comparing its historical volatility, Vita Coco is 2.44 times less risky than Universal Music. The stock trades about -0.04 of its potential returns per unit of risk. The Universal Music Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,395 in Universal Music Group on September 25, 2024 and sell it today you would earn a total of 155.00 from holding Universal Music Group or generate 6.47% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Vita Coco vs. Universal Music Group
Performance |
Timeline |
Vita Coco |
Universal Music Group |
Vita Coco and Universal Music Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vita Coco and Universal Music
The main advantage of trading using opposite Vita Coco and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vita Coco 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.Vita Coco vs. Coca Cola Femsa SAB | Vita Coco vs. Coca Cola European Partners | Vita Coco vs. Embotelladora Andina SA | Vita Coco vs. Monster Beverage Corp |
Universal Music vs. Thunderbird Entertainment Group | Universal Music vs. Warner Music Group | Universal Music vs. Live Nation Entertainment | Universal Music vs. Atlanta Braves Holdings, |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
Content Syndication Quickly integrate customizable finance content to your own investment portal | |
Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |