Correlation Between Universal and NBCUNIVERSAL

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

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

Diversification Opportunities for Universal and NBCUNIVERSAL

-0.36

Correlation Coefficient

Universal  NBCUNIVERSAL

Very good diversification

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

Pair Corralation between Universal and NBCUNIVERSAL

Considering the 90-day investment horizon Universal is expected to under-perform the NBCUNIVERSAL. But the stock apears to be less risky and, when comparing its historical volatility, Universal is 1.44 times less risky than NBCUNIVERSAL. The stock trades about -0.01 of its potential returns per unit of risk. The NBCUNIVERSAL MEDIA LLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. 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	50.0%
Values	Daily Returns

Universal  vs.  NBCUNIVERSAL MEDIA LLC

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.

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.

Pair Trading with Universal and NBCUNIVERSAL

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

The idea behind Universal and NBCUNIVERSAL MEDIA LLC 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.