Correlation Between Veolia Environnement and Wheaton Precious

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

Diversification Opportunities for Veolia Environnement and Wheaton Precious

0.73

Correlation Coefficient

Veolia Environnement  Wheaton Precious

Poor diversification

The 3 months correlation between Veolia and Wheaton is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Wheaton Precious Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheaton Precious Metals 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 Wheaton Precious. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheaton Precious Metals has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Wheaton Precious go up and down completely randomly.

Pair Corralation between Veolia Environnement and Wheaton Precious

Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 0.55 times more return on investment than Wheaton Precious. However, Veolia Environnement VE is 1.81 times less risky than Wheaton Precious. It trades about -0.09 of its potential returns per unit of risk. Wheaton Precious Metals is currently generating about -0.05 per unit of risk. If you would invest  2,952  in Veolia Environnement VE on October 24, 2024 and sell it today you would lose (184.00) from holding Veolia Environnement VE or give up 6.23% of portfolio value over 90 days.

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

Veolia Environnement VE  vs.  Wheaton Precious Metals

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 comparatively stable basic indicators, Veolia Environnement is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Wheaton Precious Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wheaton Precious Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Veolia Environnement and Wheaton Precious

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

The idea behind Veolia Environnement VE and Wheaton Precious Metals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.