Correlation Between Tikehau Capital and Eurazeo

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

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

Diversification Opportunities for Tikehau Capital and Eurazeo

0.86

Correlation Coefficient

Tikehau Capital  Eurazeo

Very poor diversification

The 3 months correlation between Tikehau and Eurazeo is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tikehau Capital and Eurazeo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eurazeo and Tikehau Capital 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 Tikehau Capital are associated (or correlated) with Eurazeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eurazeo has no effect on the direction of Tikehau Capital i.e., Tikehau Capital and Eurazeo go up and down completely randomly.

Pair Corralation between Tikehau Capital and Eurazeo

Assuming the 90 days trading horizon Tikehau Capital is expected to under-perform the Eurazeo. But the stock apears to be less risky and, when comparing its historical volatility, Tikehau Capital is 1.11 times less risky than Eurazeo. The stock trades about -0.03 of its potential returns per unit of risk. The Eurazeo is currently generating about 0.01 of returns per unit of risk over similar time horizon. 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

Tikehau Capital  vs.  Eurazeo

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.

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.

Pair Trading with Tikehau Capital and Eurazeo

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

The idea behind Tikehau Capital and Eurazeo 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.