Correlation Between Waste Management and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Waste Management and Veolia Environnement 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 Waste Management and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waste Management and Veolia Environnement SA, you can compare the effects of market volatilities on Waste Management and Veolia Environnement 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 Waste Management with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waste Management and Veolia Environnement.
Diversification Opportunities for Waste Management and Veolia Environnement
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waste and Veolia is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Waste Management and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Waste Management 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 Waste Management are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Waste Management i.e., Waste Management and Veolia Environnement go up and down completely randomly.
Pair Corralation between Waste Management and Veolia Environnement
Allowing for the 90-day total investment horizon Waste Management is expected to generate 0.58 times more return on investment than Veolia Environnement. However, Waste Management is 1.73 times less risky than Veolia Environnement. It trades about 0.22 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about 0.05 per unit of risk. If you would invest 20,583 in Waste Management on October 21, 2024 and sell it today you would earn a total of 588.00 from holding Waste Management or generate 2.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waste Management vs. Veolia Environnement SA
Performance |
| Timeline |
| Waste Management |
| Veolia Environnement |
Waste Management and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waste Management and Veolia Environnement
The main advantage of trading using opposite Waste Management and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waste Management position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
| Veolia Environnement vs. Waste Management | Veolia Environnement vs. Casella Waste Systems | Veolia Environnement vs. Montrose Environmental Grp | Veolia Environnement vs. Clean Harbors |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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