Correlation Between Carrefour and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both Carrefour and Veolia Environnement 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 Carrefour and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Carrefour SA and Veolia Environnement VE, you can compare the effects of market volatilities on Carrefour and Veolia Environnement 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 Carrefour with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Carrefour and Veolia Environnement.
Diversification Opportunities for Carrefour and Veolia Environnement
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Carrefour and Veolia is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Carrefour SA and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Carrefour 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 Carrefour SA are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Carrefour i.e., Carrefour and Veolia Environnement go up and down completely randomly.
Pair Corralation between Carrefour and Veolia Environnement
Assuming the 90 days horizon Carrefour SA is expected to generate 0.75 times more return on investment than Veolia Environnement. However, Carrefour SA is 1.33 times less risky than Veolia Environnement. It trades about 0.05 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.27 per unit of risk. If you would invest 1,444 in Carrefour SA on August 31, 2024 and sell it today you would earn a total of 12.00 from holding Carrefour SA or generate 0.83% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Carrefour SA vs. Veolia Environnement VE
Performance |
Timeline |
Carrefour SA |
Veolia Environnement |
Carrefour and Veolia Environnement Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Carrefour and Veolia Environnement
The main advantage of trading using opposite Carrefour and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Carrefour position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.Carrefour vs. Danone SA | Carrefour vs. Renault SA | Carrefour vs. AXA SA | Carrefour vs. Compagnie de Saint Gobain |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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