Correlation Between Veolia Environnement and Ross Stores

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

Diversification Opportunities for Veolia Environnement and Ross Stores

-0.61

Correlation Coefficient

Veolia Environnement  Ross Stores

Excellent diversification

The 3 months correlation between Veolia and Ross is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Ross Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ross Stores 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 Ross Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ross Stores has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Ross Stores go up and down completely randomly.

Pair Corralation between Veolia Environnement and Ross Stores

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Ross Stores. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.46 times less risky than Ross Stores. The stock trades about -0.34 of its potential returns per unit of risk. The Ross Stores is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  15,441  in Ross Stores on October 13, 2024 and sell it today you would lose (59.00) from holding Ross Stores or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.0%
Values	Daily Returns

Veolia Environnement VE  vs.  Ross Stores

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 uncertain 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.

Ross Stores

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ross Stores are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Ross Stores may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Veolia Environnement and Ross Stores

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

The idea behind Veolia Environnement VE and Ross Stores 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.