Correlation Between SAFETY MEDICAL and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both SAFETY MEDICAL 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 SAFETY MEDICAL and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SAFETY MEDICAL PROD and Veolia Environnement SA, you can compare the effects of market volatilities on SAFETY MEDICAL 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 SAFETY MEDICAL with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of SAFETY MEDICAL and Veolia Environnement.
Diversification Opportunities for SAFETY MEDICAL and Veolia Environnement
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SAFETY and Veolia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SAFETY MEDICAL PROD and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and SAFETY MEDICAL 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 SAFETY MEDICAL PROD 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 SAFETY MEDICAL i.e., SAFETY MEDICAL and Veolia Environnement go up and down completely randomly.
Pair Corralation between SAFETY MEDICAL and Veolia Environnement
Assuming the 90 days trading horizon SAFETY MEDICAL PROD is expected to under-perform the Veolia Environnement. In addition to that, SAFETY MEDICAL is 2.42 times more volatile than Veolia Environnement SA. It trades about -0.02 of its total potential returns per unit of risk. Veolia Environnement SA is currently generating about 0.05 per unit of volatility. If you would invest 2,109 in Veolia Environnement SA on September 14, 2024 and sell it today you would earn a total of 698.00 from holding Veolia Environnement SA or generate 33.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SAFETY MEDICAL PROD vs. Veolia Environnement SA
Performance |
| Timeline |
| SAFETY MEDICAL PROD |
| Veolia Environnement |
SAFETY MEDICAL and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SAFETY MEDICAL and Veolia Environnement
The main advantage of trading using opposite SAFETY MEDICAL and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SAFETY MEDICAL 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.| SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc | SAFETY MEDICAL vs. Apple Inc |
| Veolia Environnement vs. SBM OFFSHORE | Veolia Environnement vs. SAFETY MEDICAL PROD | Veolia Environnement vs. SIEM OFFSHORE NEW | Veolia Environnement vs. MeVis Medical Solutions |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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