Correlation Between Vivendi SA and Warner Music
Can any of the company-specific risk be diversified away by investing in both Vivendi SA and Warner 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 Warner 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 Warner Music Group, you can compare the effects of market volatilities on Vivendi SA and Warner 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 Warner Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivendi SA and Warner Music.
Diversification Opportunities for Vivendi SA and Warner Music
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vivendi and Warner is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SA and Warner Music Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Warner 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 Warner Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Warner Music Group has no effect on the direction of Vivendi SA i.e., Vivendi SA and Warner Music go up and down completely randomly.
Pair Corralation between Vivendi SA and Warner Music
Assuming the 90 days horizon Vivendi SA is expected to generate 1.0 times more return on investment than Warner Music. However, Vivendi SA is 1.0 times less risky than Warner Music. It trades about 0.03 of its potential returns per unit of risk. Warner Music Group is currently generating about -0.01 per unit of risk. If you would invest 1,079 in Vivendi SA on November 4, 2024 and sell it today you would earn a total of 71.00 from holding Vivendi SA or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 58.7% |
| Values | Daily Returns |
Vivendi SA vs. Warner Music Group
Performance |
| Timeline |
| Vivendi SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Warner Music Group |
Vivendi SA and Warner Music Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vivendi SA and Warner Music
The main advantage of trading using opposite Vivendi SA and Warner Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivendi SA position performs unexpectedly, Warner 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 Warner Music will offset losses from the drop in Warner Music's long position.| Vivendi SA vs. Universal Music Group | Vivendi SA vs. Reservoir Media | Vivendi SA vs. Atlanta Braves Holdings, | Vivendi SA vs. Warner Music Group |
| Warner Music vs. Liberty Media | Warner Music vs. Atlanta Braves Holdings, | Warner Music vs. News Corp B | Warner Music vs. News Corp A |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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