Correlation Between Argo Group and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Argo Group 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 Argo Group and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Argo Group Limited and Veolia Environnement VE, you can compare the effects of market volatilities on Argo Group 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 Argo Group with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Argo Group and Veolia Environnement.
Diversification Opportunities for Argo Group and Veolia Environnement
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Argo and Veolia is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Argo Group Limited and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Argo Group 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 Argo Group Limited 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 Argo Group i.e., Argo Group and Veolia Environnement go up and down completely randomly.
Pair Corralation between Argo Group and Veolia Environnement
Assuming the 90 days trading horizon Argo Group Limited is expected to generate 3.96 times more return on investment than Veolia Environnement. However, Argo Group is 3.96 times more volatile than Veolia Environnement VE. It trades about 0.01 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.06 per unit of risk. If you would invest 450.00 in Argo Group Limited on August 30, 2024 and sell it today you would lose (50.00) from holding Argo Group Limited or give up 11.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Argo Group Limited vs. Veolia Environnement VE
Performance |
| Timeline |
| Argo Group Limited |
| Veolia Environnement |
Argo Group and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Argo Group and Veolia Environnement
The main advantage of trading using opposite Argo Group and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Argo Group 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.| Argo Group vs. Optima Health plc | Argo Group vs. Spire Healthcare Group | Argo Group vs. Universal Music Group | Argo Group vs. Naturhouse Health 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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