Correlation Between ESSILORLUXOTTICA and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both ESSILORLUXOTTICA 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 ESSILORLUXOTTICA and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and Veolia Environnement SA, you can compare the effects of market volatilities on ESSILORLUXOTTICA 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 ESSILORLUXOTTICA with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and Veolia Environnement.
Diversification Opportunities for ESSILORLUXOTTICA and Veolia Environnement
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between ESSILORLUXOTTICA and Veolia is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON 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 ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and Veolia Environnement go up and down completely randomly.
Pair Corralation between ESSILORLUXOTTICA and Veolia Environnement
Assuming the 90 days trading horizon ESSILORLUXOTTICA 12ON is expected to generate 0.88 times more return on investment than Veolia Environnement. However, ESSILORLUXOTTICA 12ON is 1.14 times less risky than Veolia Environnement. It trades about 0.25 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.08 per unit of risk. If you would invest 10,500 in ESSILORLUXOTTICA 12ON on October 30, 2024 and sell it today you would earn a total of 2,200 from holding ESSILORLUXOTTICA 12ON or generate 20.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
ESSILORLUXOTTICA 12ON vs. Veolia Environnement SA
Performance |
| Timeline |
| ESSILORLUXOTTICA 12ON |
| Veolia Environnement |
ESSILORLUXOTTICA and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ESSILORLUXOTTICA and Veolia Environnement
The main advantage of trading using opposite ESSILORLUXOTTICA and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSILORLUXOTTICA 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.| ESSILORLUXOTTICA vs. UPDATE SOFTWARE | ESSILORLUXOTTICA vs. AGNC INVESTMENT | ESSILORLUXOTTICA vs. CyberArk Software | ESSILORLUXOTTICA vs. BORR DRILLING NEW |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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