Correlation Between Veolia Environnement and Waste Connections
Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and Waste Connections 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 Waste Connections 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 Waste Connections, you can compare the effects of market volatilities on Veolia Environnement and Waste Connections 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 Waste Connections. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and Waste Connections.
Diversification Opportunities for Veolia Environnement and Waste Connections
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Veolia and Waste is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and Waste Connections in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Connections 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 Waste Connections. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Connections has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Waste Connections go up and down completely randomly.
Pair Corralation between Veolia Environnement and Waste Connections
Assuming the 90 days trading horizon Veolia Environnement is expected to generate 10.34 times less return on investment than Waste Connections. In addition to that, Veolia Environnement is 1.28 times more volatile than Waste Connections. It trades about 0.01 of its total potential returns per unit of risk. Waste Connections is currently generating about 0.1 per unit of volatility. If you would invest 12,454 in Waste Connections on August 31, 2024 and sell it today you would earn a total of 5,876 from holding Waste Connections or generate 47.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Veolia Environnement SA vs. Waste Connections
Performance |
| Timeline |
| Veolia Environnement |
| Waste Connections |
Veolia Environnement and Waste Connections Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Veolia Environnement and Waste Connections
The main advantage of trading using opposite Veolia Environnement and Waste Connections positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, Waste Connections 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 Waste Connections will offset losses from the drop in Waste Connections' long position.| Veolia Environnement vs. GFL ENVIRONM | Veolia Environnement vs. Superior Plus Corp | Veolia Environnement vs. NMI Holdings | Veolia Environnement vs. Origin Agritech |
| Waste Connections vs. Veolia Environnement SA | Waste Connections vs. GFL ENVIRONM | Waste Connections vs. Superior Plus Corp | Waste Connections vs. NMI Holdings |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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