Correlation Between Alphabet and Vivendi SE

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

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

Diversification Opportunities for Alphabet and Vivendi SE

-0.73

Correlation Coefficient

Alphabet  Vivendi SE

Pay attention - limited upside

The 3 months correlation between Alphabet and Vivendi is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class A and Vivendi SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SE and Alphabet 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 Alphabet Inc Class A are associated (or correlated) with Vivendi SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivendi SE has no effect on the direction of Alphabet i.e., Alphabet and Vivendi SE go up and down completely randomly.

Pair Corralation between Alphabet and Vivendi SE

Assuming the 90 days horizon Alphabet is expected to generate 13.27 times less return on investment than Vivendi SE. But when comparing it to its historical volatility, Alphabet Inc Class A is 21.89 times less risky than Vivendi SE. It trades about 0.15 of its potential returns per unit of risk. Vivendi SE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,155  in Vivendi SE on September 29, 2024 and sell it today you would lose (555.00) from holding Vivendi SE or give up 48.05% of portfolio value over 90 days.

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

Alphabet Inc Class A  vs.  Vivendi SE

Alphabet Class A

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphabet Inc Class A are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Alphabet disclosed solid returns over the last few months and may actually be approaching a breakup point.

Vivendi SE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivendi SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Vivendi SE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphabet and Vivendi SE

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

The idea behind Alphabet Inc Class A and Vivendi SE 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.