Correlation Between Universal Music and Weyco

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

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

Diversification Opportunities for Universal Music and Weyco

-0.29

Correlation Coefficient

Universal Music  Weyco

Very good diversification

The 3 months correlation between Universal and Weyco is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Weyco Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weyco Group and Universal Music 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 Universal Music Group are associated (or correlated) with Weyco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weyco Group has no effect on the direction of Universal Music i.e., Universal Music and Weyco go up and down completely randomly.

Pair Corralation between Universal Music and Weyco

Assuming the 90 days horizon Universal Music Group is expected to generate 1.18 times more return on investment than Weyco. However, Universal Music is 1.18 times more volatile than Weyco Group. It trades about 0.09 of its potential returns per unit of risk. Weyco Group is currently generating about -0.14 per unit of risk. If you would invest  2,511  in Universal Music Group on December 29, 2024 and sell it today you would earn a total of  272.00  from holding Universal Music Group or generate 10.83% return on investment over 90 days.

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

Universal Music Group  vs.  Weyco Group

Universal Music Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Music Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Universal Music may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Weyco Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Weyco Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Universal Music and Weyco

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

The idea behind Universal Music Group and Weyco 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.