Correlation Between Veolia Environnement and DXC Technology

Can any of the company-specific risk be diversified away by investing in both Veolia Environnement and DXC Technology 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 DXC Technology 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 DXC Technology Co, you can compare the effects of market volatilities on Veolia Environnement and DXC Technology 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 DXC Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and DXC Technology.

Diversification Opportunities for Veolia Environnement and DXC Technology

-0.48

Correlation Coefficient

Veolia Environnement  DXC Technology

Very good diversification

The 3 months correlation between Veolia and DXC is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and DXC Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DXC Technology 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 DXC Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DXC Technology has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and DXC Technology go up and down completely randomly.

Pair Corralation between Veolia Environnement and DXC Technology

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the DXC Technology. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 2.97 times less risky than DXC Technology. The stock trades about -0.36 of its potential returns per unit of risk. The DXC Technology Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  2,073  in DXC Technology Co on August 30, 2024 and sell it today you would earn a total of  181.00  from holding DXC Technology Co or generate 8.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Veolia Environnement VE  vs.  DXC Technology Co

Veolia Environnement

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Veolia Environnement VE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

DXC Technology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DXC Technology Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, DXC Technology may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Veolia Environnement and DXC Technology

The main advantage of trading using opposite Veolia Environnement and DXC Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Veolia Environnement position performs unexpectedly, DXC Technology 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 DXC Technology will offset losses from the drop in DXC Technology's long position.

The idea behind Veolia Environnement VE and DXC Technology Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.