Correlation Between Volkswagen and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Volkswagen and Vivendi SA 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 Volkswagen and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Vivendi SA, you can compare the effects of market volatilities on Volkswagen and Vivendi SA 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 Volkswagen with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Vivendi SA.
Diversification Opportunities for Volkswagen and Vivendi SA
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Volkswagen and Vivendi is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Volkswagen 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 Volkswagen AG are associated (or correlated) with Vivendi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SA has no effect on the direction of Volkswagen i.e., Volkswagen and Vivendi SA go up and down completely randomly.
Pair Corralation between Volkswagen and Vivendi SA
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Vivendi SA. In addition to that, Volkswagen is 1.15 times more volatile than Vivendi SA. It trades about -0.11 of its total potential returns per unit of risk. Vivendi SA is currently generating about -0.05 per unit of volatility. If you would invest 958.00 in Vivendi SA on September 13, 2024 and sell it today you would lose (98.00) from holding Vivendi SA or give up 10.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.22% |
| Values | Daily Returns |
Volkswagen AG vs. Vivendi SA
Performance |
| Timeline |
| Volkswagen AG |
| Vivendi SA |
Volkswagen and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Vivendi SA
The main advantage of trading using opposite Volkswagen and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen position performs unexpectedly, Vivendi SA 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 Vivendi SA will offset losses from the drop in Vivendi SA's long position.| Volkswagen vs. Morgan Advanced Materials | Volkswagen vs. Summit Materials Cl | Volkswagen vs. Gamma Communications PLC | Volkswagen vs. Spirent Communications plc |
| Vivendi SA vs. Lowland Investment Co | Vivendi SA vs. Southwest Airlines Co | Vivendi SA vs. Taylor Maritime Investments | Vivendi SA vs. Schroders Investment Trusts |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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