Correlation Between Vivendi SE and UNIVMUSIC GRPADR/050

Can any of the company-specific risk be diversified away by investing in both Vivendi SE and UNIVMUSIC GRPADR/050 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 SE and UNIVMUSIC GRPADR/050 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vivendi SE and UNIVMUSIC GRPADR050, you can compare the effects of market volatilities on Vivendi SE and UNIVMUSIC GRPADR/050 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 SE with a short position of UNIVMUSIC GRPADR/050. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vivendi SE and UNIVMUSIC GRPADR/050.

Diversification Opportunities for Vivendi SE and UNIVMUSIC GRPADR/050

-0.75

Correlation Coefficient

Vivendi SE  UNIVMUSIC GRPADR/050

Pay attention - limited upside

The 3 months correlation between Vivendi and UNIVMUSIC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vivendi SE and UNIVMUSIC GRPADR050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNIVMUSIC GRPADR/050 and Vivendi SE 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 SE are associated (or correlated) with UNIVMUSIC GRPADR/050. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNIVMUSIC GRPADR/050 has no effect on the direction of Vivendi SE i.e., Vivendi SE and UNIVMUSIC GRPADR/050 go up and down completely randomly.

Pair Corralation between Vivendi SE and UNIVMUSIC GRPADR/050

Assuming the 90 days trading horizon Vivendi SE is expected to generate 2.33 times more return on investment than UNIVMUSIC GRPADR/050. However, Vivendi SE is 2.33 times more volatile than UNIVMUSIC GRPADR050. It trades about 0.07 of its potential returns per unit of risk. UNIVMUSIC GRPADR050 is currently generating about 0.05 per unit of risk. If you would invest  250.00  in Vivendi SE on October 22, 2024 and sell it today you would earn a total of  6.00  from holding Vivendi SE or generate 2.4% return on investment over 90 days.

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

Vivendi SE  vs.  UNIVMUSIC GRPADR050

Vivendi SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivendi SE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

UNIVMUSIC GRPADR/050

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in UNIVMUSIC GRPADR050 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, UNIVMUSIC GRPADR/050 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vivendi SE and UNIVMUSIC GRPADR/050

The main advantage of trading using opposite Vivendi SE and UNIVMUSIC GRPADR/050 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vivendi SE position performs unexpectedly, UNIVMUSIC GRPADR/050 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 UNIVMUSIC GRPADR/050 will offset losses from the drop in UNIVMUSIC GRPADR/050's long position.

The idea behind Vivendi SE and UNIVMUSIC GRPADR050 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.