Correlation Between Eurazeo and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Eurazeo 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 Eurazeo and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eurazeo and Vivendi SA, you can compare the effects of market volatilities on Eurazeo 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 Eurazeo with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eurazeo and Vivendi SA.
Diversification Opportunities for Eurazeo and Vivendi SA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eurazeo and Vivendi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Eurazeo and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Eurazeo 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 Eurazeo 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 Eurazeo i.e., Eurazeo and Vivendi SA go up and down completely randomly.
Pair Corralation between Eurazeo and Vivendi SA
Assuming the 90 days horizon Eurazeo is expected to generate 1.2 times more return on investment than Vivendi SA. However, Eurazeo is 1.2 times more volatile than Vivendi SA. It trades about 0.03 of its potential returns per unit of risk. Vivendi SA is currently generating about 0.01 per unit of risk. If you would invest 5,658 in Eurazeo on August 30, 2024 and sell it today you would earn a total of 1,302 from holding Eurazeo or generate 23.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eurazeo vs. Vivendi SA
Performance |
| Timeline |
| Eurazeo |
| Vivendi SA |
Eurazeo and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eurazeo and Vivendi SA
The main advantage of trading using opposite Eurazeo and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurazeo 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.| Eurazeo vs. CBO Territoria SA | Eurazeo vs. Rubis SCA | Eurazeo vs. Nexity | Eurazeo vs. Gaztransport Technigaz SAS |
| Vivendi SA vs. Vinci SA | Vivendi SA vs. Compagnie de Saint Gobain | Vivendi SA vs. Bouygues SA | Vivendi SA vs. Carrefour SA |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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