Correlation Between Vinci SA and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Vinci SA 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 Vinci SA and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vinci SA and Veolia Environnement VE, you can compare the effects of market volatilities on Vinci SA 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 Vinci SA with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vinci SA and Veolia Environnement.
Diversification Opportunities for Vinci SA and Veolia Environnement
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vinci and Veolia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vinci 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 Vinci SA 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 Vinci 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 Vinci SA i.e., Vinci SA and Veolia Environnement go up and down completely randomly.
Pair Corralation between Vinci SA and Veolia Environnement
Assuming the 90 days horizon Vinci SA is expected to generate 1.7 times less return on investment than Veolia Environnement. But when comparing it to its historical volatility, Vinci SA is 1.09 times less risky than Veolia Environnement. It trades about 0.02 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,285 in Veolia Environnement VE on August 27, 2024 and sell it today you would earn a total of 499.00 from holding Veolia Environnement VE or generate 21.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vinci SA vs. Veolia Environnement VE
Performance |
| Timeline |
| Vinci SA |
| Veolia Environnement |
Vinci SA and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vinci SA and Veolia Environnement
The main advantage of trading using opposite Vinci SA and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vinci SA 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.The idea behind Vinci SA and Veolia Environnement VE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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