Correlation Between Veolia Environnement and Mercialys
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Mercialys 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 Mercialys 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 Mercialys SA, you can compare the effects of market volatilities on Veolia Environnement and Mercialys 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 Mercialys. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Mercialys.
Diversification Opportunities for Veolia Environnement and Mercialys
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Veolia and Mercialys is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Mercialys SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercialys 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 Mercialys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercialys SA has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Mercialys go up and down completely randomly.
Pair Corralation between Veolia Environnement and Mercialys
Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Mercialys. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.11 times less risky than Mercialys. The stock trades about 0.0 of its potential returns per unit of risk. The Mercialys SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 959.00 in Mercialys SA on November 5, 2024 and sell it today you would earn a total of 98.00 from holding Mercialys SA or generate 10.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. Mercialys SA
Performance |
| Timeline |
| Veolia Environnement |
| Mercialys SA |
Veolia Environnement and Mercialys Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Mercialys
The main advantage of trading using opposite Veolia Environnement and Mercialys positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Mercialys 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 Mercialys will offset losses from the drop in Mercialys' 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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