Correlation Between Veolia Environnement and Eagle Eye

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

Diversification Opportunities for Veolia Environnement and Eagle Eye

-0.39

Correlation Coefficient

Veolia Environnement  Eagle Eye

Very good diversification

The 3 months correlation between Veolia and Eagle is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Eagle Eye Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Eye Solutions 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 Eagle Eye. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Eye Solutions has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Eagle Eye go up and down completely randomly.

Pair Corralation between Veolia Environnement and Eagle Eye

Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 0.34 times more return on investment than Eagle Eye. However, Veolia Environnement VE is 2.97 times less risky than Eagle Eye. It trades about 0.25 of its potential returns per unit of risk. Eagle Eye Solutions is currently generating about -0.1 per unit of risk. If you would invest  2,698  in Veolia Environnement VE on December 28, 2024 and sell it today you would earn a total of  508.00  from holding Veolia Environnement VE or generate 18.83% return on investment over 90 days.

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

Veolia Environnement VE  vs.  Eagle Eye Solutions

Veolia Environnement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veolia Environnement VE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Veolia Environnement unveiled solid returns over the last few months and may actually be approaching a breakup point.

Eagle Eye Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagle Eye Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Veolia Environnement and Eagle Eye

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

The idea behind Veolia Environnement VE and Eagle Eye Solutions 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.