Correlation Between JLEN Environmental and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both JLEN Environmental 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 JLEN Environmental and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between JLEN Environmental Assets and Veolia Environnement VE, you can compare the effects of market volatilities on JLEN Environmental 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 JLEN Environmental with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of JLEN Environmental and Veolia Environnement.
Diversification Opportunities for JLEN Environmental and Veolia Environnement
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between JLEN and Veolia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding JLEN Environmental Assets and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and JLEN Environmental 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 JLEN Environmental Assets 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 JLEN Environmental i.e., JLEN Environmental and Veolia Environnement go up and down completely randomly.
Pair Corralation between JLEN Environmental and Veolia Environnement
Assuming the 90 days trading horizon JLEN Environmental Assets is expected to under-perform the Veolia Environnement. In addition to that, JLEN Environmental is 1.54 times more volatile than Veolia Environnement VE. It trades about -0.34 of its total potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.22 per unit of volatility. If you would invest 2,930 in Veolia Environnement VE on August 31, 2024 and sell it today you would lose (175.00) from holding Veolia Environnement VE or give up 5.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
JLEN Environmental Assets vs. Veolia Environnement VE
Performance |
| Timeline |
| JLEN Environmental Assets |
| Veolia Environnement |
JLEN Environmental and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with JLEN Environmental and Veolia Environnement
The main advantage of trading using opposite JLEN Environmental and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if JLEN Environmental 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.| JLEN Environmental vs. Playtech Plc | JLEN Environmental vs. Raytheon Technologies Corp | JLEN Environmental vs. Uber Technologies | JLEN Environmental vs. Worldwide Healthcare Trust |
| Veolia Environnement vs. Neometals | Veolia Environnement vs. Coor Service Management | Veolia Environnement vs. Aeorema Communications Plc | Veolia Environnement vs. JLEN Environmental Assets |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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