Correlation Between InPlay Oil and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both InPlay Oil 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 InPlay Oil and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between InPlay Oil Corp and Veolia Environnement SA, you can compare the effects of market volatilities on InPlay Oil 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 InPlay Oil with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of InPlay Oil and Veolia Environnement.
Diversification Opportunities for InPlay Oil and Veolia Environnement
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between InPlay and Veolia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding InPlay Oil Corp and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and InPlay Oil 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 InPlay Oil Corp 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 InPlay Oil i.e., InPlay Oil and Veolia Environnement go up and down completely randomly.
Pair Corralation between InPlay Oil and Veolia Environnement
Assuming the 90 days trading horizon InPlay Oil Corp is expected to under-perform the Veolia Environnement. In addition to that, InPlay Oil is 1.44 times more volatile than Veolia Environnement SA. It trades about -0.48 of its total potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.18 per unit of volatility. If you would invest 2,791 in Veolia Environnement SA on September 22, 2024 and sell it today you would lose (111.00) from holding Veolia Environnement SA or give up 3.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
InPlay Oil Corp vs. Veolia Environnement SA
Performance |
| Timeline |
| InPlay Oil Corp |
| Veolia Environnement |
InPlay Oil and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with InPlay Oil and Veolia Environnement
The main advantage of trading using opposite InPlay Oil and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if InPlay Oil 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.The idea behind InPlay Oil Corp and Veolia Environnement SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Veolia Environnement vs. Waste Management | Veolia Environnement vs. Republic Services | Veolia Environnement vs. Waste Connections | Veolia Environnement vs. Veolia Environnement SA |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins |