Correlation Between Warner Music and Kartoon Studios,

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

Diversification Opportunities for Warner Music and Kartoon Studios,

0.29

Correlation Coefficient

Warner Music  Kartoon Studios,

Modest diversification

The 3 months correlation between Warner and Kartoon is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Warner Music Group and Kartoon Studios, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kartoon Studios, 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 Kartoon Studios,. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kartoon Studios, has no effect on the direction of Warner Music i.e., Warner Music and Kartoon Studios, go up and down completely randomly.

Pair Corralation between Warner Music and Kartoon Studios,

Considering the 90-day investment horizon Warner Music is expected to generate 1.78 times less return on investment than Kartoon Studios,. But when comparing it to its historical volatility, Warner Music Group is 2.25 times less risky than Kartoon Studios,. It trades about 0.14 of its potential returns per unit of risk. Kartoon Studios, is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  51.00  in Kartoon Studios, on December 4, 2024 and sell it today you would earn a total of  4.00  from holding Kartoon Studios, or generate 7.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Warner Music Group  vs.  Kartoon Studios,

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.

Kartoon Studios,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kartoon Studios, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Warner Music and Kartoon Studios,

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

The idea behind Warner Music Group and Kartoon Studios, 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.