Correlation Between Logan Ridge and Universal Music

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

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

Diversification Opportunities for Logan Ridge and Universal Music

0.04

Correlation Coefficient

Logan Ridge  Universal Music

Significant diversification

The 3 months correlation between Logan and Universal is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Logan Ridge Finance 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 Logan Ridge 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 Logan Ridge Finance 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 Logan Ridge i.e., Logan Ridge and Universal Music go up and down completely randomly.

Pair Corralation between Logan Ridge and Universal Music

Given the investment horizon of 90 days Logan Ridge Finance is expected to under-perform the Universal Music. But the stock apears to be less risky and, when comparing its historical volatility, Logan Ridge Finance is 1.41 times less risky than Universal Music. The stock trades about -0.12 of its potential returns per unit of risk. The Universal Music Group is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,267  in Universal Music Group on December 20, 2024 and sell it today you would earn a total of  127.00  from holding Universal Music Group or generate 10.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Logan Ridge Finance  vs.  Universal Music Group

Logan Ridge Finance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Logan Ridge Finance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Universal Music Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Music Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Universal Music may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Logan Ridge and Universal Music

The main advantage of trading using opposite Logan Ridge and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Logan Ridge 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.

The idea behind Logan Ridge Finance and Universal 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.