Correlation Between Veolia Environnement and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Virgin Wines 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 Virgin Wines 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 Virgin Wines UK, you can compare the effects of market volatilities on Veolia Environnement and Virgin Wines 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 Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Virgin Wines.
Diversification Opportunities for Veolia Environnement and Virgin Wines
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Veolia and Virgin is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK 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 Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Virgin Wines go up and down completely randomly.
Pair Corralation between Veolia Environnement and Virgin Wines
Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 1.01 times more return on investment than Virgin Wines. However, Veolia Environnement is 1.01 times more volatile than Virgin Wines UK. It trades about -0.03 of its potential returns per unit of risk. Virgin Wines UK is currently generating about -0.19 per unit of risk. If you would invest 2,888 in Veolia Environnement VE on September 19, 2024 and sell it today you would lose (164.00) from holding Veolia Environnement VE or give up 5.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. Virgin Wines UK
Performance |
| Timeline |
| Veolia Environnement |
| Virgin Wines UK |
Veolia Environnement and Virgin Wines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Virgin Wines
The main advantage of trading using opposite Veolia Environnement and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.| Veolia Environnement vs. Samsung Electronics Co | Veolia Environnement vs. Samsung Electronics Co | Veolia Environnement vs. Hyundai Motor | Veolia Environnement vs. Reliance Industries Ltd |
| Virgin Wines vs. Ondine Biomedical | Virgin Wines vs. Europa Metals | Virgin Wines vs. Revolution Beauty Group | Virgin Wines vs. Moonpig Group 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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