Correlation Between Veolia Environnement and United Utilities
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and United Utilities 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 United Utilities 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 United Utilities Group, you can compare the effects of market volatilities on Veolia Environnement and United Utilities 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 United Utilities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and United Utilities.
Diversification Opportunities for Veolia Environnement and United Utilities
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Veolia and United is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and United Utilities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Utilities 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 United Utilities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Utilities has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and United Utilities go up and down completely randomly.
Pair Corralation between Veolia Environnement and United Utilities
Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the United Utilities. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.22 times less risky than United Utilities. The stock trades about -0.1 of its potential returns per unit of risk. The United Utilities Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 105,322 in United Utilities Group on September 12, 2024 and sell it today you would earn a total of 2,478 from holding United Utilities Group or generate 2.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. United Utilities Group
Performance |
| Timeline |
| Veolia Environnement |
| United Utilities |
Veolia Environnement and United Utilities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and United Utilities
The main advantage of trading using opposite Veolia Environnement and United Utilities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, United Utilities 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 United Utilities will offset losses from the drop in United Utilities' long position.| Veolia Environnement vs. Solstad Offshore ASA | Veolia Environnement vs. Bisichi Mining PLC | Veolia Environnement vs. Fresenius Medical Care | Veolia Environnement vs. Creo Medical Group |
| United Utilities vs. Vitec Software Group | United Utilities vs. Ecofin Global Utilities | United Utilities vs. Everyman Media Group | United Utilities vs. Catena Media PLC |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges |