Correlation Between Wendel and Vivendi SA

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

By analyzing existing cross correlation between Wendel and Vivendi SA, you can compare the effects of market volatilities on Wendel and Vivendi SA 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 Vivendi SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wendel and Vivendi SA.

Diversification Opportunities for Wendel and Vivendi SA

0.17

Correlation Coefficient

Wendel  Vivendi SA

Average diversification

The 3 months correlation between Wendel and Vivendi is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Wendel and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA 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 Vivendi SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SA has no effect on the direction of Wendel i.e., Wendel and Vivendi SA go up and down completely randomly.

Pair Corralation between Wendel and Vivendi SA

Assuming the 90 days horizon Wendel is expected to under-perform the Vivendi SA. But the stock apears to be less risky and, when comparing its historical volatility, Wendel is 1.61 times less risky than Vivendi SA. The stock trades about -0.02 of its potential returns per unit of risk. The Vivendi SA is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  253.00  in Vivendi SA on December 24, 2024 and sell it today you would earn a total of  23.00  from holding Vivendi SA or generate 9.09% return on investment over 90 days.

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

Wendel  vs.  Vivendi SA

Wendel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Wendel has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Vivendi SA

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vivendi SA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Vivendi SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Wendel and Vivendi SA

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

The idea behind Wendel and Vivendi SA 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.