Correlation Between Les Hotels and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Les Hotels 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 Les Hotels and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Les Hotels Bav and Veolia Environnement VE, you can compare the effects of market volatilities on Les Hotels 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 Les Hotels with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Les Hotels and Veolia Environnement.
Diversification Opportunities for Les Hotels and Veolia Environnement
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Les and Veolia is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Les Hotels Bav and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Les Hotels 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 Les Hotels Bav 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 Les Hotels i.e., Les Hotels and Veolia Environnement go up and down completely randomly.
Pair Corralation between Les Hotels and Veolia Environnement
Assuming the 90 days trading horizon Les Hotels Bav is expected to generate 1.41 times more return on investment than Veolia Environnement. However, Les Hotels is 1.41 times more volatile than Veolia Environnement VE. It trades about 0.07 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.01 per unit of risk. If you would invest 5,626 in Les Hotels Bav on September 14, 2024 and sell it today you would earn a total of 1,524 from holding Les Hotels Bav or generate 27.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.02% |
| Values | Daily Returns |
Les Hotels Bav vs. Veolia Environnement VE
Performance |
| Timeline |
| Les Hotels Bav |
| Veolia Environnement |
Les Hotels and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Les Hotels and Veolia Environnement
The main advantage of trading using opposite Les Hotels and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Les Hotels 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.| Les Hotels vs. Les Htels de | Les Hotels vs. Moulinvest | Les Hotels vs. Bernard Loisea | Les Hotels vs. Groupimo SA |
| Veolia Environnement vs. Vinci SA | Veolia Environnement vs. Compagnie de Saint Gobain | Veolia Environnement vs. Bouygues SA | Veolia Environnement vs. Engie 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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