Correlation Between Compass Group and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Vivendi SA, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Vivendi SA.
Diversification Opportunities for Compass Group and Vivendi SA
-0.91 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compass and Vivendi is -0.91. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group PLC and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Compass Group 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 Compass Group PLC 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 Compass Group i.e., Compass Group and Vivendi SA go up and down completely randomly.
Pair Corralation between Compass Group and Vivendi SA
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 0.78 times more return on investment than Vivendi SA. However, Compass Group PLC is 1.29 times less risky than Vivendi SA. It trades about 0.08 of its potential returns per unit of risk. Vivendi SA is currently generating about 0.02 per unit of risk. If you would invest 205,220 in Compass Group PLC on September 12, 2024 and sell it today you would earn a total of 62,880 from holding Compass Group PLC or generate 30.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 99.72% |
| Values | Daily Returns |
Compass Group PLC vs. Vivendi SA
Performance |
| Timeline |
| Compass Group PLC |
| Vivendi SA |
Compass Group and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Vivendi SA
The main advantage of trading using opposite Compass Group and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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.| Compass Group vs. Auction Technology Group | Compass Group vs. Take Two Interactive Software | Compass Group vs. Cognizant Technology Solutions | Compass Group vs. Litigation Capital Management |
| Vivendi SA vs. LPKF Laser Electronics | Vivendi SA vs. Zegona Communications Plc | Vivendi SA vs. United Internet AG | Vivendi SA vs. Compal Electronics GDR |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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