Correlation Between Eurazeo and Vivendi SA

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

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

Diversification Opportunities for Eurazeo and Vivendi SA

-0.41

Correlation Coefficient

Eurazeo  Vivendi SA

Very good diversification

The 3 months correlation between Eurazeo and Vivendi is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Eurazeo and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA 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 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 Eurazeo i.e., Eurazeo and Vivendi SA go up and down completely randomly.

Pair Corralation between Eurazeo and Vivendi SA

Assuming the 90 days horizon Eurazeo is expected to under-perform the Vivendi SA. But the stock apears to be less risky and, when comparing its historical volatility, Eurazeo is 1.3 times less risky than Vivendi SA. The stock trades about -0.05 of its potential returns per unit of risk. The Vivendi SA is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  277.00  in Vivendi SA on December 4, 2024 and sell it today you would earn a total of  18.00  from holding Vivendi SA or generate 6.5% return on investment over 90 days.

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

Eurazeo  vs.  Vivendi SA

Eurazeo

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eurazeo are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Eurazeo may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vivendi SA

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Eurazeo and Vivendi SA

The main advantage of trading using opposite Eurazeo and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eurazeo 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 Eurazeo 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.