Correlation Between Ecofin Global and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Ecofin Global 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 Ecofin Global and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofin Global Utilities and Veolia Environnement VE, you can compare the effects of market volatilities on Ecofin Global 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 Ecofin Global with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofin Global and Veolia Environnement.
Diversification Opportunities for Ecofin Global and Veolia Environnement
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Ecofin and Veolia is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Ecofin Global Utilities and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Ecofin Global 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 Ecofin Global Utilities 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 Ecofin Global i.e., Ecofin Global and Veolia Environnement go up and down completely randomly.
Pair Corralation between Ecofin Global and Veolia Environnement
Assuming the 90 days trading horizon Ecofin Global Utilities is expected to generate 0.94 times more return on investment than Veolia Environnement. However, Ecofin Global Utilities is 1.06 times less risky than Veolia Environnement. It trades about 0.08 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.23 per unit of risk. If you would invest 19,100 in Ecofin Global Utilities on September 4, 2024 and sell it today you would earn a total of 350.00 from holding Ecofin Global Utilities or generate 1.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofin Global Utilities vs. Veolia Environnement VE
Performance |
| Timeline |
| Ecofin Global Utilities |
| Veolia Environnement |
Ecofin Global and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofin Global and Veolia Environnement
The main advantage of trading using opposite Ecofin Global and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofin Global 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.| Ecofin Global vs. SupplyMe Capital PLC | Ecofin Global vs. Lloyds Banking Group | Ecofin Global vs. Premier African Minerals | Ecofin Global vs. SANTANDER UK 8 |
| Veolia Environnement vs. Hansa Investment | Veolia Environnement vs. Martin Marietta Materials | Veolia Environnement vs. International Biotechnology Trust | Veolia Environnement vs. Morgan Advanced Materials |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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