Correlation Between Arbe Robotics and Universal Music

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Can any of the company-specific risk be diversified away by investing in both Arbe Robotics 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 Arbe Robotics and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arbe Robotics and Universal Music Group, you can compare the effects of market volatilities on Arbe Robotics 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 Arbe Robotics with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arbe Robotics and Universal Music.

Diversification Opportunities for Arbe Robotics and Universal Music

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Arbe Robotics and Universal is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Arbe Robotics 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 Arbe Robotics 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 Arbe Robotics 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 Arbe Robotics i.e., Arbe Robotics and Universal Music go up and down completely randomly.

Pair Corralation between Arbe Robotics and Universal Music

Given the investment horizon of 90 days Arbe Robotics is expected to under-perform the Universal Music. In addition to that, Arbe Robotics is 1.12 times more volatile than Universal Music Group. It trades about -0.04 of its total potential returns per unit of risk. Universal Music Group is currently generating about 0.0 per unit of volatility. If you would invest  2,658  in Universal Music Group on August 30, 2022 and sell it today you would lose (335.00)  from holding Universal Music Group or give up 12.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy59.84%
ValuesDaily Returns

Arbe Robotics  vs.  Universal Music Group

 Performance (%) 
       Timeline  
Arbe Robotics 
Arbe Robotics Performance
0 of 100
Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental drivers remain rather sound which may send shares a bit higher in December 2022. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Arbe Robotics Price Channel

Universal Music Group 
Universal Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Universal Music Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Universal Music exhibited solid returns over the last few months and may actually be approaching a breakup point.

Universal Price Channel

Arbe Robotics and Universal Music Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Arbe Robotics and Universal Music

The main advantage of trading using opposite Arbe Robotics and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arbe Robotics 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.
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The idea behind Arbe Robotics 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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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.

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