Correlation Between Ford and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Vivendi SA, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Vivendi SA.
Diversification Opportunities for Ford and Vivendi SA
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ford and Vivendi is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Ford 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 Ford Motor 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 Ford i.e., Ford and Vivendi SA go up and down completely randomly.
Pair Corralation between Ford and Vivendi SA
Taking into account the 90-day investment horizon Ford is expected to generate 3.7 times less return on investment than Vivendi SA. In addition to that, Ford is 1.08 times more volatile than Vivendi SA. It trades about 0.01 of its total potential returns per unit of risk. Vivendi SA is currently generating about 0.04 per unit of volatility. If you would invest 891.00 in Vivendi SA on September 2, 2024 and sell it today you would earn a total of 259.00 from holding Vivendi SA or generate 29.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 84.48% |
| Values | Daily Returns |
Ford Motor vs. Vivendi SA
Performance |
| Timeline |
| Ford Motor |
| Vivendi SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Ford and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Vivendi SA
The main advantage of trading using opposite Ford and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and Vivendi SA 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.| Vivendi SA vs. Universal Music Group | Vivendi SA vs. Reservoir Media | Vivendi SA vs. Atlanta Braves Holdings, | Vivendi SA vs. Warner Music Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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