Correlation Between UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC

Can any of the company-specific risk be diversified away by investing in both UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC 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 UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between UNIVMUSIC GRPADR050 and UNIVERSAL MUSIC GROUP, you can compare the effects of market volatilities on UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC 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 UNIVMUSIC GRPADR/050 with a short position of UNIVERSAL MUSIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC.

Diversification Opportunities for UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC

0.98

Correlation Coefficient

UNIVMUSIC GRPADR/050  UNIVERSAL MUSIC

Almost no diversification

The 3 months correlation between UNIVMUSIC and UNIVERSAL is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding UNIVMUSIC GRPADR050 and UNIVERSAL MUSIC GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVERSAL MUSIC GROUP and UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR050 are associated (or correlated) with UNIVERSAL MUSIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVERSAL MUSIC GROUP has no effect on the direction of UNIVMUSIC GRPADR/050 i.e., UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC go up and down completely randomly.

Pair Corralation between UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC

Assuming the 90 days trading horizon UNIVMUSIC GRPADR/050 is expected to generate 1.03 times less return on investment than UNIVERSAL MUSIC. In addition to that, UNIVMUSIC GRPADR/050 is 1.21 times more volatile than UNIVERSAL MUSIC GROUP. It trades about 0.13 of its total potential returns per unit of risk. UNIVERSAL MUSIC GROUP is currently generating about 0.17 per unit of volatility. If you would invest  2,378  in UNIVERSAL MUSIC GROUP on April 21, 2025 and sell it today you would earn a total of  324.00  from holding UNIVERSAL MUSIC GROUP or generate 13.62% return on investment over 90 days.

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

UNIVMUSIC GRPADR050  vs.  UNIVERSAL MUSIC GROUP

UNIVMUSIC GRPADR/050

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, UNIVMUSIC GRPADR/050 reported solid returns over the last few months and may actually be approaching a breakup point.

UNIVERSAL MUSIC GROUP

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVERSAL MUSIC GROUP are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, UNIVERSAL MUSIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC

The main advantage of trading using opposite UNIVMUSIC GRPADR/050 and UNIVERSAL MUSIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNIVMUSIC GRPADR/050 position performs unexpectedly, UNIVERSAL MUSIC 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 UNIVERSAL MUSIC will offset losses from the drop in UNIVERSAL MUSIC's long position.

The idea behind UNIVMUSIC GRPADR050 and UNIVERSAL MUSIC GROUP 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.