Correlation Between Universal Music and Robeco Sust

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

Diversification Opportunities for Universal Music and Robeco Sust

0.85

Correlation Coefficient

Universal Music  Robeco Sust

Very poor diversification

The 3 months correlation between Universal and Robeco is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Robeco Sust Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Robeco Sust Global 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 Robeco Sust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Robeco Sust Global has no effect on the direction of Universal Music i.e., Universal Music and Robeco Sust go up and down completely randomly.

Pair Corralation between Universal Music and Robeco Sust

Assuming the 90 days trading horizon Universal Music is expected to generate 1.12 times less return on investment than Robeco Sust. In addition to that, Universal Music is 1.6 times more volatile than Robeco Sust Global. It trades about 0.14 of its total potential returns per unit of risk. Robeco Sust Global is currently generating about 0.25 per unit of volatility. If you would invest  6,804  in Robeco Sust Global on April 22, 2025 and sell it today you would earn a total of  890.00  from holding Robeco Sust Global or generate 13.08% return on investment over 90 days.

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

Universal Music Group  vs.  Robeco Sust Global

Universal Music Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Universal Music Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Universal Music may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Robeco Sust Global

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Robeco Sust Global are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Robeco Sust may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Universal Music and Robeco Sust

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

The idea behind Universal Music Group and Robeco Sust Global 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.