Correlation Between Veolia Environnement and Evolution Gaming

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

Diversification Opportunities for Veolia Environnement and Evolution Gaming

0.42

Correlation Coefficient

Veolia Environnement  Evolution Gaming

Very weak diversification

The 3 months correlation between Veolia and Evolution is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Evolution Gaming Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evolution Gaming 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 Evolution Gaming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evolution Gaming has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Evolution Gaming go up and down completely randomly.

Pair Corralation between Veolia Environnement and Evolution Gaming

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Evolution Gaming. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.96 times less risky than Evolution Gaming. The stock trades about -0.15 of its potential returns per unit of risk. The Evolution Gaming Group is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  99,360  in Evolution Gaming Group on September 24, 2024 and sell it today you would lose (8,880) from holding Evolution Gaming Group or give up 8.94% of portfolio value over 90 days.

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

Veolia Environnement VE  vs.  Evolution Gaming Group

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.

Evolution Gaming

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evolution Gaming Group 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.

Pair Trading with Veolia Environnement and Evolution Gaming

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

The idea behind Veolia Environnement VE and Evolution Gaming Group 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.