Correlation Between Givaudan and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Givaudan 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 Givaudan and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Givaudan SA and Veolia Environnement VE, you can compare the effects of market volatilities on Givaudan 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 Givaudan with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Givaudan and Veolia Environnement.
Diversification Opportunities for Givaudan and Veolia Environnement
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Givaudan and Veolia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Givaudan SA and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Givaudan 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 Givaudan SA 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 Givaudan i.e., Givaudan and Veolia Environnement go up and down completely randomly.
Pair Corralation between Givaudan and Veolia Environnement
Assuming the 90 days trading horizon Givaudan SA is expected to generate 1.02 times more return on investment than Veolia Environnement. However, Givaudan is 1.02 times more volatile than Veolia Environnement VE. It trades about 0.05 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.0 per unit of risk. If you would invest 336,006 in Givaudan SA on September 3, 2024 and sell it today you would earn a total of 50,744 from holding Givaudan SA or generate 15.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.6% |
| Values | Daily Returns |
Givaudan SA vs. Veolia Environnement VE
Performance |
| Timeline |
| Givaudan SA |
| Veolia Environnement |
Givaudan and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Givaudan and Veolia Environnement
The main advantage of trading using opposite Givaudan and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Givaudan 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.| Givaudan vs. Veolia Environnement VE | Givaudan vs. Dentsply Sirona | Givaudan vs. Tatton Asset Management | Givaudan vs. United States Steel |
| Veolia Environnement vs. Seche Environnement SA | Veolia Environnement vs. Iron Mountain | Veolia Environnement vs. Cairo Communication SpA | Veolia Environnement vs. Impax Asset Management |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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