Correlation Between Universal Music and Vivendi SA
Can any of the company-specific risk be diversified away by investing in both Universal Music 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 Universal Music and Vivendi SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and Vivendi SA, you can compare the effects of market volatilities on Universal Music 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 Universal Music with a short position of Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Vivendi SA.
Diversification Opportunities for Universal Music and Vivendi SA
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Universal and Vivendi is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music Group and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Universal Music 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 Universal Music Group 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 Universal Music i.e., Universal Music and Vivendi SA go up and down completely randomly.
Pair Corralation between Universal Music and Vivendi SA
Assuming the 90 days horizon Universal Music is expected to generate 2.1 times less return on investment than Vivendi SA. But when comparing it to its historical volatility, Universal Music Group is 1.24 times less risky than Vivendi SA. It trades about 0.01 of its potential returns per unit of risk. Vivendi SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,029 in Vivendi SA on October 24, 2024 and sell it today you would earn a total of 121.00 from holding Vivendi SA or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.89% |
| Values | Daily Returns |
Universal Music Group vs. Vivendi SA
Performance |
| Timeline |
| Universal Music Group |
| Vivendi SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Universal Music and Vivendi SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Vivendi SA
The main advantage of trading using opposite Universal Music and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music 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.| Universal Music vs. Universal Media Group | Universal Music vs. Bollor SE | Universal Music vs. Reading International | Universal Music vs. Warner Music Group |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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