Correlation Between Baker Steel and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Baker Steel 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 Baker Steel and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baker Steel Resources and Veolia Environnement VE, you can compare the effects of market volatilities on Baker Steel 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 Baker Steel with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Steel and Veolia Environnement.
Diversification Opportunities for Baker Steel and Veolia Environnement
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Baker and Veolia is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Baker Steel Resources and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Baker Steel 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 Baker Steel Resources 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 Baker Steel i.e., Baker Steel and Veolia Environnement go up and down completely randomly.
Pair Corralation between Baker Steel and Veolia Environnement
Assuming the 90 days trading horizon Baker Steel Resources is expected to generate 1.3 times more return on investment than Veolia Environnement. However, Baker Steel is 1.3 times more volatile than Veolia Environnement VE. It trades about 0.03 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 5,550 in Baker Steel Resources on September 2, 2024 and sell it today you would earn a total of 250.00 from holding Baker Steel Resources or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baker Steel Resources vs. Veolia Environnement VE
Performance |
| Timeline |
| Baker Steel Resources |
| Veolia Environnement |
Baker Steel and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baker Steel and Veolia Environnement
The main advantage of trading using opposite Baker Steel and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baker Steel 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.| Baker Steel vs. Toyota Motor Corp | Baker Steel vs. SoftBank Group Corp | Baker Steel vs. OTP Bank Nyrt | Baker Steel vs. Las Vegas Sands |
| Veolia Environnement vs. Uniper SE | Veolia Environnement vs. Mulberry Group PLC | Veolia Environnement vs. London Security Plc | Veolia Environnement vs. Triad Group PLC |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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