Correlation Between Eurazeo and Tikehau Capital

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

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

Diversification Opportunities for Eurazeo and Tikehau Capital

0.86

Correlation Coefficient

Eurazeo  Tikehau Capital

Very poor diversification

The 3 months correlation between Eurazeo and Tikehau is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Eurazeo and Tikehau Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tikehau Capital and Eurazeo 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 Eurazeo 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 Eurazeo i.e., Eurazeo and Tikehau Capital go up and down completely randomly.

Pair Corralation between Eurazeo and Tikehau Capital

Assuming the 90 days horizon Eurazeo is expected to generate 1.11 times more return on investment than Tikehau Capital. However, Eurazeo is 1.11 times more volatile than Tikehau Capital. It trades about 0.01 of its potential returns per unit of risk. Tikehau Capital is currently generating about -0.03 per unit of risk. If you would invest  7,085  in Eurazeo on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Eurazeo or generate 0.28% return on investment over 90 days.

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

Eurazeo  vs.  Tikehau Capital

Eurazeo

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eurazeo has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eurazeo 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

Very Weak

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

The main advantage of trading using opposite Eurazeo and Tikehau Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurazeo 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 Eurazeo 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.