Correlation Between Caledonia Investments and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments 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 Caledonia Investments and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Veolia Environnement VE, you can compare the effects of market volatilities on Caledonia Investments 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 Caledonia Investments with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Veolia Environnement.
Diversification Opportunities for Caledonia Investments and Veolia Environnement
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caledonia and Veolia is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Caledonia Investments 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 Caledonia Investments 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 Caledonia Investments i.e., Caledonia Investments and Veolia Environnement go up and down completely randomly.
Pair Corralation between Caledonia Investments and Veolia Environnement
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 0.94 times more return on investment than Veolia Environnement. However, Caledonia Investments is 1.07 times less risky than Veolia Environnement. It trades about 0.22 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 350,500 in Caledonia Investments on October 20, 2024 and sell it today you would earn a total of 14,500 from holding Caledonia Investments or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caledonia Investments vs. Veolia Environnement VE
Performance |
| Timeline |
| Caledonia Investments |
| Veolia Environnement |
Caledonia Investments and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Veolia Environnement
The main advantage of trading using opposite Caledonia Investments and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments 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.| Caledonia Investments vs. Bioventix | Caledonia Investments vs. VeriSign | Caledonia Investments vs. Games Workshop Group | Caledonia Investments vs. AJ Bell 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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