Correlation Between Vivendi SA and Universal Music
Can any of the company-specific risk be diversified away by investing in both Vivendi SA and Universal Music 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 Vivendi SA and Universal Music into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vivendi SA and Universal Music Group, you can compare the effects of market volatilities on Vivendi SA and Universal Music 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 Vivendi SA with a short position of Universal Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivendi SA and Universal Music.
Diversification Opportunities for Vivendi SA and Universal Music
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vivendi and Universal is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SA and Universal Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal Music Group and Vivendi SA 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 Vivendi SA are associated (or correlated) with Universal Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal Music Group has no effect on the direction of Vivendi SA i.e., Vivendi SA and Universal Music go up and down completely randomly.
Pair Corralation between Vivendi SA and Universal Music
Assuming the 90 days trading horizon Vivendi SA is expected to generate 1.71 times less return on investment than Universal Music. But when comparing it to its historical volatility, Vivendi SA is 1.4 times less risky than Universal Music. It trades about 0.01 of its potential returns per unit of risk. Universal Music Group is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 2,176 in Universal Music Group on August 30, 2024 and sell it today you would earn a total of 88.00 from holding Universal Music Group or generate 4.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Vivendi SA vs. Universal Music Group
Performance |
| Timeline |
| Vivendi SA |
| Universal Music Group |
Vivendi SA and Universal Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vivendi SA and Universal Music
The main advantage of trading using opposite Vivendi SA and Universal Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivendi SA position performs unexpectedly, Universal Music 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 Universal Music will offset losses from the drop in Universal Music's long position.| Vivendi SA vs. Vinci SA | Vivendi SA vs. Compagnie de Saint Gobain | Vivendi SA vs. Bouygues SA | Vivendi SA vs. Carrefour SA |
| Universal Music vs. Vivendi SA | Universal Music vs. Prosus NV | Universal Music vs. Pershing Square Holdings | Universal Music vs. Adyen NV |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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