Correlation Between Hf Foods and Warner Music
Can any of the company-specific risk be diversified away by investing in both Hf Foods 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 Hf Foods and Warner Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hf Foods Group and Warner Music Group, you can compare the effects of market volatilities on Hf Foods 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 Hf Foods with a short position of Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hf Foods and Warner Music.
Diversification Opportunities for Hf Foods and Warner Music
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between HFFG and Warner is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hf Foods Group 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 Hf Foods 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 Hf Foods Group 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 Hf Foods i.e., Hf Foods and Warner Music go up and down completely randomly.
Pair Corralation between Hf Foods and Warner Music
Given the investment horizon of 90 days Hf Foods Group is expected to under-perform the Warner Music. In addition to that, Hf Foods is 1.37 times more volatile than Warner Music Group. It trades about -0.08 of its total potential returns per unit of risk. Warner Music Group is currently generating about -0.05 per unit of volatility. If you would invest 3,219 in Warner Music Group on October 7, 2024 and sell it today you would lose (117.00) from holding Warner Music Group or give up 3.63% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Hf Foods Group vs. Warner Music Group
Performance |
Timeline |
Hf Foods Group |
Warner Music Group |
Hf Foods and Warner Music Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hf Foods and Warner Music
The main advantage of trading using opposite Hf Foods and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hf Foods 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.Hf Foods vs. Innovative Food Hldg | Hf Foods vs. G Willi Food International | Hf Foods vs. Calavo Growers | Hf Foods vs. The Chefs Warehouse |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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