Correlation Between UNITED UTILITIES and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES 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 UTILITIES 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 UTILITIES GR and Veolia Environnement SA, you can compare the effects of market volatilities on UNITED UTILITIES 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 UTILITIES with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and Veolia Environnement.
Diversification Opportunities for UNITED UTILITIES and Veolia Environnement
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between UNITED and Veolia is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR 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 UTILITIES 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 UTILITIES GR 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 UTILITIES i.e., UNITED UTILITIES and Veolia Environnement go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and Veolia Environnement
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the Veolia Environnement. In addition to that, UNITED UTILITIES is 1.48 times more volatile than Veolia Environnement SA. It trades about -0.06 of its total potential returns per unit of risk. Veolia Environnement SA is currently generating about -0.02 per unit of volatility. If you would invest 1,340 in Veolia Environnement SA on November 8, 2024 and sell it today you would lose (10.00) from holding Veolia Environnement SA or give up 0.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. Veolia Environnement SA
Performance |
| Timeline |
| UNITED UTILITIES |
| Veolia Environnement |
UNITED UTILITIES and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and Veolia Environnement
The main advantage of trading using opposite UNITED UTILITIES and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES 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 UTILITIES vs. HK Electric Investments | UNITED UTILITIES vs. Alliance Data Systems | UNITED UTILITIES vs. SEI INVESTMENTS | UNITED UTILITIES vs. Information Services International Dentsu |
| Veolia Environnement vs. APPLIED MATERIALS | Veolia Environnement vs. NEWELL RUBBERMAID | Veolia Environnement vs. Plastic Omnium | Veolia Environnement vs. SWISS WATER DECAFFCOFFEE |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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