Correlation Between Warner Bros and Vivendi SA

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

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

Diversification Opportunities for Warner Bros and Vivendi SA

0.5

Correlation Coefficient

Warner Bros  Vivendi SA

Very weak diversification

The 3 months correlation between Warner and Vivendi is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Warner Bros Discovery and Vivendi SA PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA PK and Warner Bros 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 Warner Bros Discovery 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 PK has no effect on the direction of Warner Bros i.e., Warner Bros and Vivendi SA go up and down completely randomly.

Pair Corralation between Warner Bros and Vivendi SA

If you would invest  736.00  in Warner Bros Discovery on September 1, 2024 and sell it today you would earn a total of  312.00  from holding Warner Bros Discovery or generate 42.39% return on investment over 90 days.

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

Warner Bros Discovery  vs.  Vivendi SA PK

Warner Bros Discovery

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Warner Bros Discovery are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain fundamental drivers, Warner Bros exhibited solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Warner Bros and Vivendi SA

The main advantage of trading using opposite Warner Bros and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warner Bros 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 Warner Bros Discovery and Vivendi SA PK 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.