Correlation Between Veolia Environnement and Derichebourg
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Derichebourg 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 Derichebourg 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 Derichebourg, you can compare the effects of market volatilities on Veolia Environnement and Derichebourg 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 Derichebourg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Derichebourg.
Diversification Opportunities for Veolia Environnement and Derichebourg
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Veolia and Derichebourg is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Derichebourg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Derichebourg 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 Derichebourg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Derichebourg has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Derichebourg go up and down completely randomly.
Pair Corralation between Veolia Environnement and Derichebourg
Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Derichebourg. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 3.44 times less risky than Derichebourg. The stock trades about -0.11 of its potential returns per unit of risk. The Derichebourg is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Derichebourg on September 12, 2024 and sell it today you would earn a total of 17.00 from holding Derichebourg or generate 3.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. Derichebourg
Performance |
| Timeline |
| Veolia Environnement |
| Derichebourg |
Veolia Environnement and Derichebourg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Derichebourg
The main advantage of trading using opposite Veolia Environnement and Derichebourg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Derichebourg 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 Derichebourg will offset losses from the drop in Derichebourg'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 |
| Derichebourg vs. Eramet SA | Derichebourg vs. Trigano SA | Derichebourg vs. Soitec SA | Derichebourg vs. Rubis SCA |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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