Correlation Between Vivendi SA and California Water

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

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

Diversification Opportunities for Vivendi SA and California Water

-0.46

Correlation Coefficient

Vivendi SA  California Water

Very good diversification

The 3 months correlation between Vivendi and California is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SA PK and California Water Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Water Service and Vivendi SA 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 Vivendi SA PK are associated (or correlated) with California Water. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Water Service has no effect on the direction of Vivendi SA i.e., Vivendi SA and California Water go up and down completely randomly.

Pair Corralation between Vivendi SA and California Water

If you would invest  1,057  in Vivendi SA PK on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Vivendi SA PK or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Vivendi SA PK  vs.  California Water Service

Vivendi SA PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivendi SA PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical indicators, Vivendi SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

California Water Service

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days California Water Service has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, California Water is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Vivendi SA and California Water

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

The idea behind Vivendi SA PK and California Water Service 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.