Correlation Between Veolia Environnement and Engie SA
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Engie SA 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 Engie SA 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 Engie SA, you can compare the effects of market volatilities on Veolia Environnement and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Engie SA.
Diversification Opportunities for Veolia Environnement and Engie SA
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Veolia and Engie is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Engie SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Engie SA go up and down completely randomly.
Pair Corralation between Veolia Environnement and Engie SA
Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Engie SA. In addition to that, Veolia Environnement is 2.0 times more volatile than Engie SA. It trades about -0.27 of its total potential returns per unit of risk. Engie SA is currently generating about -0.14 per unit of volatility. If you would invest 1,575 in Engie SA on August 24, 2024 and sell it today you would lose (28.00) from holding Engie SA or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. Engie SA
Performance |
| Timeline |
| Veolia Environnement |
| Engie SA |
Veolia Environnement and Engie SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Engie SA
The main advantage of trading using opposite Veolia Environnement and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA'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 |
| Engie SA vs. Orange SA | Engie SA vs. Veolia Environnement VE | Engie SA vs. AXA SA | Engie SA vs. TotalEnergies SE |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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