Correlation Between Veolia Environnement and MELIA HOTELS
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and MELIA HOTELS 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 MELIA HOTELS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Veolia Environnement SA and MELIA HOTELS, you can compare the effects of market volatilities on Veolia Environnement and MELIA HOTELS 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 MELIA HOTELS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and MELIA HOTELS.
Diversification Opportunities for Veolia Environnement and MELIA HOTELS
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Veolia and MELIA is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and MELIA HOTELS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MELIA HOTELS 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 SA are associated (or correlated) with MELIA HOTELS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MELIA HOTELS has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and MELIA HOTELS go up and down completely randomly.
Pair Corralation between Veolia Environnement and MELIA HOTELS
Assuming the 90 days trading horizon Veolia Environnement SA is expected to generate 0.51 times more return on investment than MELIA HOTELS. However, Veolia Environnement SA is 1.97 times less risky than MELIA HOTELS. It trades about -0.02 of its potential returns per unit of risk. MELIA HOTELS is currently generating about -0.05 per unit of risk. If you would invest 2,820 in Veolia Environnement SA on September 13, 2024 and sell it today you would lose (16.00) from holding Veolia Environnement SA or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Veolia Environnement SA vs. MELIA HOTELS
Performance |
| Timeline |
| Veolia Environnement |
| MELIA HOTELS |
Veolia Environnement and MELIA HOTELS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and MELIA HOTELS
The main advantage of trading using opposite Veolia Environnement and MELIA HOTELS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, MELIA HOTELS 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 MELIA HOTELS will offset losses from the drop in MELIA HOTELS's long position.| Veolia Environnement vs. MELIA HOTELS | Veolia Environnement vs. Playa Hotels Resorts | Veolia Environnement vs. Compagnie Plastic Omnium | Veolia Environnement vs. Materialise NV |
| MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc | MELIA HOTELS vs. Apple Inc |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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