Correlation Between Universal Music and SRENVX

Can any of the company-specific risk be diversified away by investing in both Universal Music and SRENVX 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 SRENVX 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 SRENVX 5 02 APR 49, you can compare the effects of market volatilities on Universal Music and SRENVX 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 SRENVX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and SRENVX.

Diversification Opportunities for Universal Music and SRENVX

0.19

Correlation Coefficient

Universal Music  SRENVX

Average diversification

The 3 months correlation between Universal and SRENVX is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and SRENVX 5 02 APR 49 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SRENVX 5 02 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 SRENVX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SRENVX 5 02 has no effect on the direction of Universal Music i.e., Universal Music and SRENVX go up and down completely randomly.

Pair Corralation between Universal Music and SRENVX

Assuming the 90 days horizon Universal Music Group is expected to generate 1.41 times more return on investment than SRENVX. However, Universal Music is 1.41 times more volatile than SRENVX 5 02 APR 49. It trades about 0.06 of its potential returns per unit of risk. SRENVX 5 02 APR 49 is currently generating about -0.14 per unit of risk. If you would invest  1,293  in Universal Music Group on December 25, 2024 and sell it today you would earn a total of  79.00  from holding Universal Music Group or generate 6.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	30.51%
Values	Daily Returns

Universal Music Group  vs.  SRENVX 5 02 APR 49

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 4 (%) 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.

SRENVX 5 02

Risk-Adjusted Performance

Very Weak

Over the last 90 days SRENVX 5 02 APR 49 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for SRENVX 5 02 APR 49 investors.

Pair Trading with Universal Music and SRENVX

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

The idea behind Universal Music Group and SRENVX 5 02 APR 49 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.