Correlation Between Credit Agricole and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Credit Agricole 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 Credit Agricole and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Credit Agricole SA and Veolia Environnement VE, you can compare the effects of market volatilities on Credit Agricole 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 Credit Agricole with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and Veolia Environnement.
Diversification Opportunities for Credit Agricole and Veolia Environnement
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Credit and Veolia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole 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 Credit Agricole 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 Credit Agricole 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 Credit Agricole i.e., Credit Agricole and Veolia Environnement go up and down completely randomly.
Pair Corralation between Credit Agricole and Veolia Environnement
Assuming the 90 days trading horizon Credit Agricole SA is expected to generate 1.02 times more return on investment than Veolia Environnement. However, Credit Agricole is 1.02 times more volatile than Veolia Environnement VE. It trades about -0.11 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.13 per unit of risk. If you would invest 1,381 in Credit Agricole SA on August 26, 2024 and sell it today you would lose (76.00) from holding Credit Agricole SA or give up 5.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Credit Agricole SA vs. Veolia Environnement VE
Performance |
| Timeline |
| Credit Agricole SA |
| Veolia Environnement |
Credit Agricole and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Credit Agricole and Veolia Environnement
The main advantage of trading using opposite Credit Agricole and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Agricole 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.| Credit Agricole vs. BNP Paribas SA | Credit Agricole vs. AXA SA | Credit Agricole vs. Orange SA | Credit Agricole vs. Carrefour SA |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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