Correlation Between Thales SA and Vivendi SA

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

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

Diversification Opportunities for Thales SA and Vivendi SA

-0.05

Correlation Coefficient

Thales SA  Vivendi SA

Good diversification

The 3 months correlation between Thales and Vivendi is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA and Vivendi SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivendi SA and Thales 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 Thales SA 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 has no effect on the direction of Thales SA i.e., Thales SA and Vivendi SA go up and down completely randomly.

Pair Corralation between Thales SA and Vivendi SA

Assuming the 90 days horizon Thales SA is expected to generate 1.21 times more return on investment than Vivendi SA. However, Thales SA is 1.21 times more volatile than Vivendi SA. It trades about -0.01 of its potential returns per unit of risk. Vivendi SA is currently generating about -0.21 per unit of risk. If you would invest  14,498  in Thales SA on September 5, 2024 and sell it today you would lose (198.00) from holding Thales SA or give up 1.37% of portfolio value over 90 days.

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

Thales SA  vs.  Vivendi SA

Thales SA

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vivendi SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vivendi SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Thales SA and Vivendi SA

The main advantage of trading using opposite Thales SA and Vivendi SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA 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 Thales SA and Vivendi SA 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..