Correlation Between Industrial and Vivendi SE

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

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

Diversification Opportunities for Industrial and Vivendi SE

-0.31

Correlation Coefficient

Industrial  Vivendi SE

Very good diversification

The 3 months correlation between Industrial and Vivendi is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Vivendi SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SE and Industrial 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 Industrial and Commercial 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 Industrial i.e., Industrial and Vivendi SE go up and down completely randomly.

Pair Corralation between Industrial and Vivendi SE

Assuming the 90 days horizon Industrial and Commercial is expected to generate 2.14 times more return on investment than Vivendi SE. However, Industrial is 2.14 times more volatile than Vivendi SE. It trades about 0.05 of its potential returns per unit of risk. Vivendi SE is currently generating about -0.16 per unit of risk. If you would invest  51.00  in Industrial and Commercial on September 3, 2024 and sell it today you would earn a total of  4.00  from holding Industrial and Commercial or generate 7.84% return on investment over 90 days.

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

Industrial and Commercial  vs.  Vivendi SE

Industrial and Commercial

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vivendi SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivendi SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Industrial and Vivendi SE

The main advantage of trading using opposite Industrial and Vivendi SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial 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 Industrial and Commercial 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.