Correlation Between Warner Music and Manchester United

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

Diversification Opportunities for Warner Music and Manchester United

-0.57

Correlation Coefficient

Warner Music  Manchester United

Excellent diversification

The 3 months correlation between Warner and Manchester is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Manchester United in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manchester United 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 Manchester United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manchester United has no effect on the direction of Warner Music i.e., Warner Music and Manchester United go up and down completely randomly.

Pair Corralation between Warner Music and Manchester United

Considering the 90-day investment horizon Warner Music Group is expected to generate 1.11 times more return on investment than Manchester United. However, Warner Music is 1.11 times more volatile than Manchester United. It trades about 0.05 of its potential returns per unit of risk. Manchester United is currently generating about -0.25 per unit of risk. If you would invest  3,080  in Warner Music Group on December 29, 2024 and sell it today you would earn a total of  146.00  from holding Warner Music Group or generate 4.74% return on investment over 90 days.

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

Warner Music Group  vs.  Manchester United

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.

Manchester United

Risk-Adjusted Performance

Very Weak

Over the last 90 days Manchester United has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Warner Music and Manchester United

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

The idea behind Warner Music Group and Manchester United 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..