Correlation Between NBCUNIVERSAL and Universal

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

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

Diversification Opportunities for NBCUNIVERSAL and Universal

-0.36

Correlation Coefficient

NBCUNIVERSAL  Universal

Very good diversification

The 3 months correlation between NBCUNIVERSAL and Universal is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NBCUNIVERSAL MEDIA LLC and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal and NBCUNIVERSAL 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 NBCUNIVERSAL MEDIA LLC are associated (or correlated) with Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of NBCUNIVERSAL i.e., NBCUNIVERSAL and Universal go up and down completely randomly.

Pair Corralation between NBCUNIVERSAL and Universal

Assuming the 90 days trading horizon NBCUNIVERSAL MEDIA LLC is expected to generate 1.41 times more return on investment than Universal. However, NBCUNIVERSAL is 1.41 times more volatile than Universal. It trades about 0.07 of its potential returns per unit of risk. Universal is currently generating about 0.01 per unit of risk. If you would invest  10,293  in NBCUNIVERSAL MEDIA LLC on September 21, 2024 and sell it today you would earn a total of  134.00  from holding NBCUNIVERSAL MEDIA LLC or generate 1.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

NBCUNIVERSAL MEDIA LLC  vs.  Universal

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBCUNIVERSAL MEDIA LLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NBCUNIVERSAL MEDIA LLC investors.

Universal

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with NBCUNIVERSAL and Universal

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

The idea behind NBCUNIVERSAL MEDIA LLC and Universal 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.