Correlation Between BOSTON BEER and Vivendi SE

Can any of the company-specific risk be diversified away by investing in both BOSTON BEER and Vivendi SE 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 BOSTON BEER and Vivendi SE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BOSTON BEER A and Vivendi SE, you can compare the effects of market volatilities on BOSTON BEER and Vivendi SE 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 BOSTON BEER with a short position of Vivendi SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOSTON BEER and Vivendi SE.

Diversification Opportunities for BOSTON BEER and Vivendi SE

-0.25

Correlation Coefficient

BOSTON BEER  Vivendi SE

Very good diversification

The 3 months correlation between BOSTON and Vivendi is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding BOSTON BEER A and Vivendi SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SE and BOSTON BEER 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 BOSTON BEER A are associated (or correlated) with Vivendi SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SE has no effect on the direction of BOSTON BEER i.e., BOSTON BEER and Vivendi SE go up and down completely randomly.

Pair Corralation between BOSTON BEER and Vivendi SE

Assuming the 90 days trading horizon BOSTON BEER A is expected to under-perform the Vivendi SE. But the stock apears to be less risky and, when comparing its historical volatility, BOSTON BEER A is 1.34 times less risky than Vivendi SE. The stock trades about -0.27 of its potential returns per unit of risk. The Vivendi SE is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  252.00  in Vivendi SE on December 24, 2024 and sell it today you would earn a total of  28.00  from holding Vivendi SE or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

BOSTON BEER A   vs.  Vivendi SE

BOSTON BEER A

Risk-Adjusted Performance

Very Weak

Over the last 90 days BOSTON BEER A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vivendi SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vivendi SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Vivendi SE unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOSTON BEER and Vivendi SE

The main advantage of trading using opposite BOSTON BEER and Vivendi SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOSTON BEER position performs unexpectedly, Vivendi SE 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 SE will offset losses from the drop in Vivendi SE's long position.

The idea behind BOSTON BEER A and Vivendi SE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.