Correlation Between BKV and Vivendi SE

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

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

Diversification Opportunities for BKV and Vivendi SE

-0.61

Correlation Coefficient

BKV  Vivendi SE

Excellent diversification

The 3 months correlation between BKV and Vivendi is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding BKV Corp. and Vivendi SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SE and BKV 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 BKV Corporation 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 BKV i.e., BKV and Vivendi SE go up and down completely randomly.

Pair Corralation between BKV and Vivendi SE

Considering the 90-day investment horizon BKV is expected to generate 10.07 times less return on investment than Vivendi SE. But when comparing it to its historical volatility, BKV Corporation is 22.06 times less risky than Vivendi SE. It trades about 0.2 of its potential returns per unit of risk. Vivendi SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,151  in Vivendi SE on September 27, 2024 and sell it today you would lose (551.00) from holding Vivendi SE or give up 47.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BKV Corp.  vs.  Vivendi SE

BKV Corporation

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in BKV Corporation are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward-looking signals, BKV showed solid returns over the last few months and may actually be approaching a breakup point.

Vivendi SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivendi SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Vivendi SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BKV and Vivendi SE

The main advantage of trading using opposite BKV and Vivendi SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BKV 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 BKV Corporation 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.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .