Correlation Between Veolia Environnement and Orange SA
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Orange 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 Orange 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 Orange SA, you can compare the effects of market volatilities on Veolia Environnement and Orange 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 Orange SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Orange SA.
Diversification Opportunities for Veolia Environnement and Orange SA
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Veolia and Orange is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Orange SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange 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 Orange SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange SA has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Orange SA go up and down completely randomly.
Pair Corralation between Veolia Environnement and Orange SA
Assuming the 90 days trading horizon Veolia Environnement is expected to generate 5.16 times less return on investment than Orange SA. In addition to that, Veolia Environnement is 1.42 times more volatile than Orange SA. It trades about 0.07 of its total potential returns per unit of risk. Orange SA is currently generating about 0.53 per unit of volatility. If you would invest 962.00 in Orange SA on November 5, 2024 and sell it today you would earn a total of 76.00 from holding Orange SA or generate 7.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement VE vs. Orange SA
Performance |
| Timeline |
| Veolia Environnement |
| Orange SA |
Veolia Environnement and Orange SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Orange SA
The main advantage of trading using opposite Veolia Environnement and Orange SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Orange 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 Orange SA will offset losses from the drop in Orange 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 |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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