Correlation Between Veolia Environnement and Givaudan
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Givaudan 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 Givaudan 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 Givaudan SA, you can compare the effects of market volatilities on Veolia Environnement and Givaudan 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 Givaudan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Givaudan.
Diversification Opportunities for Veolia Environnement and Givaudan
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Veolia and Givaudan is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Givaudan SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Givaudan SA 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 Givaudan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Givaudan SA has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Givaudan go up and down completely randomly.
Pair Corralation between Veolia Environnement and Givaudan
Assuming the 90 days trading horizon Veolia Environnement is expected to generate 35.58 times less return on investment than Givaudan. But when comparing it to its historical volatility, Veolia Environnement VE is 1.11 times less risky than Givaudan. It trades about 0.0 of its potential returns per unit of risk. Givaudan SA is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 289,126 in Givaudan SA on September 4, 2024 and sell it today you would earn a total of 98,524 from holding Givaudan SA or generate 34.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
Veolia Environnement VE vs. Givaudan SA
Performance |
| Timeline |
| Veolia Environnement |
| Givaudan SA |
Veolia Environnement and Givaudan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Givaudan
The main advantage of trading using opposite Veolia Environnement and Givaudan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Givaudan 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 Givaudan will offset losses from the drop in Givaudan's long position.| Veolia Environnement vs. Hansa Investment | Veolia Environnement vs. Martin Marietta Materials | Veolia Environnement vs. International Biotechnology Trust | Veolia Environnement vs. Morgan Advanced Materials |
| Givaudan vs. Sabre Insurance Group | Givaudan vs. St Galler Kantonalbank | Givaudan vs. Cembra Money Bank | Givaudan vs. UNIQA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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