Correlation Between Wendel and Tikehau Capital

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

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

Diversification Opportunities for Wendel and Tikehau Capital

0.56

Correlation Coefficient

Wendel  Tikehau Capital

Very weak diversification

The 3 months correlation between Wendel and Tikehau is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Wendel and Tikehau Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tikehau Capital and Wendel 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 Wendel are associated (or correlated) with Tikehau Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tikehau Capital has no effect on the direction of Wendel i.e., Wendel and Tikehau Capital go up and down completely randomly.

Pair Corralation between Wendel and Tikehau Capital

Assuming the 90 days horizon Wendel is expected to generate 0.94 times more return on investment than Tikehau Capital. However, Wendel is 1.07 times less risky than Tikehau Capital. It trades about 0.05 of its potential returns per unit of risk. Tikehau Capital is currently generating about 0.03 per unit of risk. If you would invest  9,395  in Wendel on November 29, 2024 and sell it today you would earn a total of  320.00  from holding Wendel or generate 3.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Wendel  vs.  Tikehau Capital

Wendel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Wendel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Wendel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Tikehau Capital

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tikehau Capital are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Tikehau Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wendel and Tikehau Capital

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

The idea behind Wendel and Tikehau Capital 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.