Correlation Between Voltalia and Neoen SA
Can any of the company-specific risk be diversified away by investing in both Voltalia and Neoen 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 Voltalia and Neoen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Voltalia SA and Neoen SA, you can compare the effects of market volatilities on Voltalia and Neoen 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 Voltalia with a short position of Neoen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Voltalia and Neoen SA.
Diversification Opportunities for Voltalia and Neoen SA
Weak diversification
The 3 months correlation between Voltalia and Neoen is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Voltalia SA and Neoen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoen SA and Voltalia 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 Voltalia SA are associated (or correlated) with Neoen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoen SA has no effect on the direction of Voltalia i.e., Voltalia and Neoen SA go up and down completely randomly.
Pair Corralation between Voltalia and Neoen SA
Assuming the 90 days trading horizon Voltalia SA is expected to under-perform the Neoen SA. In addition to that, Voltalia is 14.11 times more volatile than Neoen SA. It trades about -0.38 of its total potential returns per unit of risk. Neoen SA is currently generating about 0.07 per unit of volatility. If you would invest 3,935 in Neoen SA on August 25, 2024 and sell it today you would earn a total of 10.00 from holding Neoen SA or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Voltalia SA vs. Neoen SA
Performance |
| Timeline |
| Voltalia SA |
| Neoen SA |
Voltalia and Neoen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Voltalia and Neoen SA
The main advantage of trading using opposite Voltalia and Neoen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Voltalia position performs unexpectedly, Neoen 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 Neoen SA will offset losses from the drop in Neoen SA's long position.| Voltalia vs. Neoen SA | Voltalia vs. Gaztransport Technigaz SAS | Voltalia vs. Carbios | Voltalia vs. Manitou BF SA |
| Neoen SA vs. Voltalia SA | Neoen SA vs. Gaztransport Technigaz SAS | Neoen SA vs. Worldline SA | Neoen SA 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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