Correlation Between Veolia Environnement and BIO UV
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and BIO UV 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 Veolia Environnement and BIO UV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veolia Environnement VE and BIO UV Group, you can compare the effects of market volatilities on Veolia Environnement and BIO UV 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 Veolia Environnement with a short position of BIO UV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and BIO UV.
Diversification Opportunities for Veolia Environnement and BIO UV
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Veolia and BIO is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and BIO UV Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIO UV Group and Veolia Environnement 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 Veolia Environnement VE are associated (or correlated) with BIO UV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIO UV Group has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and BIO UV go up and down completely randomly.
Pair Corralation between Veolia Environnement and BIO UV
Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 0.64 times more return on investment than BIO UV. However, Veolia Environnement VE is 1.56 times less risky than BIO UV. It trades about 0.14 of its potential returns per unit of risk. BIO UV Group is currently generating about -0.11 per unit of risk. If you would invest 2,684 in Veolia Environnement VE on November 30, 2024 and sell it today you would earn a total of 192.00 from holding Veolia Environnement VE or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. BIO UV Group
Performance |
| Timeline |
| Veolia Environnement |
| BIO UV Group |
Veolia Environnement and BIO UV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and BIO UV
The main advantage of trading using opposite Veolia Environnement and BIO UV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, BIO UV 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 BIO UV will offset losses from the drop in BIO UV's long position.| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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