Correlation Between Compagnie and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Compagnie 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 Compagnie and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and Veolia Environnement VE, you can compare the effects of market volatilities on Compagnie 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 Compagnie with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Veolia Environnement.
Diversification Opportunities for Compagnie and Veolia Environnement
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Compagnie and Veolia is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Compagnie 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 Compagnie de Saint Gobain 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 Compagnie i.e., Compagnie and Veolia Environnement go up and down completely randomly.
Pair Corralation between Compagnie and Veolia Environnement
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 1.28 times more return on investment than Veolia Environnement. However, Compagnie is 1.28 times more volatile than Veolia Environnement VE. It trades about 0.1 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about 0.04 per unit of risk. If you would invest 4,323 in Compagnie de Saint Gobain on August 27, 2024 and sell it today you would earn a total of 4,427 from holding Compagnie de Saint Gobain or generate 102.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Veolia Environnement VE
Performance |
| Timeline |
| Compagnie de Saint |
| Veolia Environnement |
Compagnie and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Veolia Environnement
The main advantage of trading using opposite Compagnie and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie 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.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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