Correlation Between Universal Music and Reckitt Benckiser
Can any of the company-specific risk be diversified away by investing in both Universal Music and Reckitt Benckiser 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 Music and Reckitt Benckiser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and Reckitt Benckiser Group, you can compare the effects of market volatilities on Universal Music and Reckitt Benckiser 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 Music with a short position of Reckitt Benckiser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Reckitt Benckiser.
Diversification Opportunities for Universal Music and Reckitt Benckiser
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Universal and Reckitt is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Reckitt Benckiser Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reckitt Benckiser and Universal 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 Universal Music Group are associated (or correlated) with Reckitt Benckiser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reckitt Benckiser has no effect on the direction of Universal Music i.e., Universal Music and Reckitt Benckiser go up and down completely randomly.
Pair Corralation between Universal Music and Reckitt Benckiser
If you would invest 2,254 in Universal Music Group on September 26, 2024 and sell it today you would earn a total of 215.00 from holding Universal Music Group or generate 9.54% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 4.55% |
Values | Daily Returns |
Universal Music Group vs. Reckitt Benckiser Group
Performance |
Timeline |
Universal Music Group |
Reckitt Benckiser |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Universal Music and Reckitt Benckiser Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Universal Music and Reckitt Benckiser
The main advantage of trading using opposite Universal Music and Reckitt Benckiser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Reckitt Benckiser 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 Reckitt Benckiser will offset losses from the drop in Reckitt Benckiser's long position.Universal Music vs. Uniper SE | ||
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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.
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