Correlation Between Retail Estates and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Retail Estates and Veolia Environnement 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 Retail Estates and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Retail Estates NV and Veolia Environnement VE, you can compare the effects of market volatilities on Retail Estates and Veolia Environnement 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 Retail Estates with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Estates and Veolia Environnement.
Diversification Opportunities for Retail Estates and Veolia Environnement
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Retail and Veolia is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Retail Estates NV and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Retail Estates 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 Retail Estates NV are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Retail Estates i.e., Retail Estates and Veolia Environnement go up and down completely randomly.
Pair Corralation between Retail Estates and Veolia Environnement
Assuming the 90 days trading horizon Retail Estates NV is expected to generate 8.05 times more return on investment than Veolia Environnement. However, Retail Estates is 8.05 times more volatile than Veolia Environnement VE. It trades about 0.11 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.32 per unit of risk. If you would invest 6,360 in Retail Estates NV on August 29, 2024 and sell it today you would earn a total of 850.00 from holding Retail Estates NV or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Retail Estates NV vs. Veolia Environnement VE
Performance |
| Timeline |
| Retail Estates NV |
| Veolia Environnement |
Retail Estates and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Retail Estates and Veolia Environnement
The main advantage of trading using opposite Retail Estates and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retail Estates position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| Retail Estates vs. Lendinvest PLC | Retail Estates vs. Neometals | Retail Estates vs. Coor Service Management | Retail Estates vs. Albion Technology General |
| Veolia Environnement vs. Lendinvest PLC | Veolia Environnement vs. Neometals | Veolia Environnement vs. Coor Service Management | Veolia Environnement vs. Albion Technology General |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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