Correlation Between Veolia Environnement and Triad Group

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

Diversification Opportunities for Veolia Environnement and Triad Group

0.2

Correlation Coefficient

Veolia Environnement  Triad Group

Modest diversification

The 3 months correlation between Veolia and Triad is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Triad Group PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triad Group PLC 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 Triad Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triad Group PLC has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Triad Group go up and down completely randomly.

Pair Corralation between Veolia Environnement and Triad Group

Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 1.24 times more return on investment than Triad Group. However, Veolia Environnement is 1.24 times more volatile than Triad Group PLC. It trades about -0.05 of its potential returns per unit of risk. Triad Group PLC is currently generating about -0.42 per unit of risk. If you would invest  2,742  in Veolia Environnement VE on October 5, 2024 and sell it today you would lose (23.00) from holding Veolia Environnement VE or give up 0.84% of portfolio value over 90 days.

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

Veolia Environnement VE  vs.  Triad Group PLC

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.

Triad Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Triad Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Triad Group is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Veolia Environnement and Triad Group

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

The idea behind Veolia Environnement VE and Triad Group PLC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.