Correlation Between Vivendi SA and Vallourec
Can any of the company-specific risk be diversified away by investing in both Vivendi SA and Vallourec 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 Vallourec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vivendi SA and Vallourec, you can compare the effects of market volatilities on Vivendi SA and Vallourec 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 Vallourec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivendi SA and Vallourec.
Diversification Opportunities for Vivendi SA and Vallourec
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vivendi and Vallourec is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SA and Vallourec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vallourec 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 Vallourec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vallourec has no effect on the direction of Vivendi SA i.e., Vivendi SA and Vallourec go up and down completely randomly.
Pair Corralation between Vivendi SA and Vallourec
Assuming the 90 days trading horizon Vivendi SA is expected to under-perform the Vallourec. But the stock apears to be less risky and, when comparing its historical volatility, Vivendi SA is 1.68 times less risky than Vallourec. The stock trades about -0.47 of its potential returns per unit of risk. The Vallourec is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,412 in Vallourec on August 27, 2024 and sell it today you would earn a total of 247.00 from holding Vallourec or generate 17.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vivendi SA vs. Vallourec
Performance |
| Timeline |
| Vivendi SA |
| Vallourec |
Vivendi SA and Vallourec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vivendi SA and Vallourec
The main advantage of trading using opposite Vivendi SA and Vallourec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivendi SA position performs unexpectedly, Vallourec 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 Vallourec will offset losses from the drop in Vallourec's long position.| Vivendi SA vs. Vallourec | Vivendi SA vs. Genfit | Vivendi SA vs. Innate Pharma | Vivendi SA vs. Etablissements Maurel et |
| Vallourec vs. Alstom SA | Vallourec vs. Compagnie de Saint Gobain | Vallourec vs. Bouygues SA | Vallourec vs. Manitou BF 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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