Correlation Between United Natural and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Veolia Environnement SA, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Veolia Environnement.
Diversification Opportunities for United Natural and Veolia Environnement
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and Veolia is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Veolia Environnement go up and down completely randomly.
Pair Corralation between United Natural and Veolia Environnement
Assuming the 90 days horizon United Natural Foods is expected to generate 2.45 times more return on investment than Veolia Environnement. However, United Natural is 2.45 times more volatile than Veolia Environnement SA. It trades about 0.34 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.26 per unit of risk. If you would invest 1,875 in United Natural Foods on August 31, 2024 and sell it today you would earn a total of 415.00 from holding United Natural Foods or generate 22.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. Veolia Environnement SA
Performance |
| Timeline |
| United Natural Foods |
| Veolia Environnement |
United Natural and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Veolia Environnement
The main advantage of trading using opposite United Natural and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. Charter Communications | United Natural vs. Perseus Mining Limited | United Natural vs. Jacquet Metal Service | United Natural vs. SBA Communications Corp |
| Veolia Environnement vs. Mobilezone Holding AG | Veolia Environnement vs. Singapore Telecommunications Limited | Veolia Environnement vs. UNITED RENTALS | Veolia Environnement vs. SBA Communications Corp |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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