Correlation Between Universal Music and Sealed Air
Can any of the company-specific risk be diversified away by investing in both Universal Music and Sealed Air 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 Sealed Air 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 Sealed Air, you can compare the effects of market volatilities on Universal Music and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Sealed Air.
Diversification Opportunities for Universal Music and Sealed Air
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Universal and Sealed is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Sealed Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air has no effect on the direction of Universal Music i.e., Universal Music and Sealed Air go up and down completely randomly.
Pair Corralation between Universal Music and Sealed Air
Assuming the 90 days horizon Universal Music Group is expected to generate 1.39 times more return on investment than Sealed Air. However, Universal Music is 1.39 times more volatile than Sealed Air. It trades about 0.03 of its potential returns per unit of risk. Sealed Air is currently generating about -0.04 per unit of risk. If you would invest 2,475 in Universal Music Group on September 23, 2024 and sell it today you would earn a total of 67.00 from holding Universal Music Group or generate 2.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Universal Music Group vs. Sealed Air
Performance |
Timeline |
Universal Music Group |
Sealed Air |
Universal Music and Sealed Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Universal Music and Sealed Air
The main advantage of trading using opposite Universal Music and Sealed Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music position performs unexpectedly, Sealed Air 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 Sealed Air will offset losses from the drop in Sealed Air's long position.Universal Music vs. Thunderbird Entertainment Group | Universal Music vs. Warner Music Group | Universal Music vs. Live Nation Entertainment | Universal Music vs. Atlanta Braves Holdings, |
Sealed Air vs. Ball Corporation | Sealed Air vs. Silgan Holdings | Sealed Air vs. Reynolds Consumer Products | Sealed Air vs. Myers Industries |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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