Correlation Between Veolia Environnement and HCA Healthcare
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and HCA Healthcare 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 Veolia Environnement and HCA Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veolia Environnement VE and HCA Healthcare, you can compare the effects of market volatilities on Veolia Environnement and HCA Healthcare 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 Veolia Environnement with a short position of HCA Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and HCA Healthcare.
Diversification Opportunities for Veolia Environnement and HCA Healthcare
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Veolia and HCA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and HCA Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HCA Healthcare and Veolia Environnement 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 Veolia Environnement VE are associated (or correlated) with HCA Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HCA Healthcare has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and HCA Healthcare go up and down completely randomly.
Pair Corralation between Veolia Environnement and HCA Healthcare
Assuming the 90 days trading horizon Veolia Environnement is expected to generate 5.53 times less return on investment than HCA Healthcare. But when comparing it to its historical volatility, Veolia Environnement VE is 1.74 times less risky than HCA Healthcare. It trades about 0.09 of its potential returns per unit of risk. HCA Healthcare is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 29,769 in HCA Healthcare on November 7, 2024 and sell it today you would earn a total of 3,728 from holding HCA Healthcare or generate 12.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 91.3% |
| Values | Daily Returns |
Veolia Environnement VE vs. HCA Healthcare
Performance |
| Timeline |
| Veolia Environnement |
| HCA Healthcare |
Veolia Environnement and HCA Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and HCA Healthcare
The main advantage of trading using opposite Veolia Environnement and HCA Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, HCA Healthcare 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 HCA Healthcare will offset losses from the drop in HCA Healthcare's long position.| Veolia Environnement vs. Games Workshop Group | Veolia Environnement vs. GreenX Metals | Veolia Environnement vs. Evolution Gaming Group | Veolia Environnement vs. First Class Metals |
| HCA Healthcare vs. Darden Restaurants | HCA Healthcare vs. Veolia Environnement VE | HCA Healthcare vs. Various Eateries PLC | HCA Healthcare vs. Zurich Insurance Group |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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