Correlation Between Warner Music and Bullfrog

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

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

Diversification Opportunities for Warner Music and Bullfrog

0.76

Correlation Coefficient

Warner Music  Bullfrog

Poor diversification

The 3 months correlation between Warner and Bullfrog is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Bullfrog AI Holdings, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bullfrog AI Holdings, and Warner 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 Warner Music Group are associated (or correlated) with Bullfrog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bullfrog AI Holdings, has no effect on the direction of Warner Music i.e., Warner Music and Bullfrog go up and down completely randomly.

Pair Corralation between Warner Music and Bullfrog

Considering the 90-day investment horizon Warner Music is expected to generate 14.85 times less return on investment than Bullfrog. But when comparing it to its historical volatility, Warner Music Group is 9.29 times less risky than Bullfrog. It trades about 0.05 of its potential returns per unit of risk. Bullfrog AI Holdings, is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  43.00  in Bullfrog AI Holdings, on December 29, 2024 and sell it today you would earn a total of  7.00  from holding Bullfrog AI Holdings, or generate 16.28% return on investment over 90 days.

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

Warner Music Group  vs.  Bullfrog AI Holdings,

Warner Music Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Music Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Warner Music is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Bullfrog AI Holdings,

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bullfrog AI Holdings, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Bullfrog showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Warner Music and Bullfrog

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

The idea behind Warner Music Group and Bullfrog AI Holdings, 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.