Correlation Between Universal Music and ATHENE

Can any of the company-specific risk be diversified away by investing in both Universal Music and ATHENE 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 ATHENE 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 ATHENE HLDG LTD, you can compare the effects of market volatilities on Universal Music and ATHENE 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 ATHENE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and ATHENE.

Diversification Opportunities for Universal Music and ATHENE

0.2

Correlation Coefficient

Universal Music  ATHENE

Modest diversification

The 3 months correlation between Universal and ATHENE is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and ATHENE HLDG LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATHENE HLDG LTD 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 ATHENE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATHENE HLDG LTD has no effect on the direction of Universal Music i.e., Universal Music and ATHENE go up and down completely randomly.

Pair Corralation between Universal Music and ATHENE

Assuming the 90 days horizon Universal Music Group is expected to generate 1.06 times more return on investment than ATHENE. However, Universal Music is 1.06 times more volatile than ATHENE HLDG LTD. It trades about 0.01 of its potential returns per unit of risk. ATHENE HLDG LTD is currently generating about -0.25 per unit of risk. If you would invest  1,230  in Universal Music Group on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Universal Music Group or generate 0.08% return on investment over 90 days.

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

Universal Music Group  vs.  ATHENE HLDG LTD

Universal Music Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Universal Music Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Universal Music is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

ATHENE HLDG LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ATHENE HLDG LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, ATHENE is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Universal Music and ATHENE

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

The idea behind Universal Music Group and ATHENE HLDG LTD 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.

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.