Correlation Between United Internet and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both United Internet 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 United Internet and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Internet AG and Veolia Environnement VE, you can compare the effects of market volatilities on United Internet 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 United Internet with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Internet and Veolia Environnement.
Diversification Opportunities for United Internet and Veolia Environnement
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between United and Veolia is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding United Internet AG and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and United Internet 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 United Internet AG 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 United Internet i.e., United Internet and Veolia Environnement go up and down completely randomly.
Pair Corralation between United Internet and Veolia Environnement
Assuming the 90 days trading horizon United Internet AG is expected to under-perform the Veolia Environnement. In addition to that, United Internet is 1.57 times more volatile than Veolia Environnement VE. It trades about -0.1 of its total potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.08 per unit of volatility. If you would invest 2,740 in Veolia Environnement VE on October 17, 2024 and sell it today you would lose (43.00) from holding Veolia Environnement VE or give up 1.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Internet AG vs. Veolia Environnement VE
Performance |
| Timeline |
| United Internet AG |
| Veolia Environnement |
United Internet and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Internet and Veolia Environnement
The main advantage of trading using opposite United Internet and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Internet 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.| United Internet vs. One Media iP | United Internet vs. Zegona Communications Plc | United Internet vs. Silver Bullet Data | United Internet vs. Verizon Communications |
| Veolia Environnement vs. United Internet AG | Veolia Environnement vs. Cornish Metals | Veolia Environnement vs. Panther Metals PLC | Veolia Environnement vs. AMG Advanced Metallurgical |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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