Correlation Between Fair Oaks and Veolia Environnement

Can any of the company-specific risk be diversified away by investing in both Fair Oaks 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 Fair Oaks and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fair Oaks Income and Veolia Environnement VE, you can compare the effects of market volatilities on Fair Oaks 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 Fair Oaks with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fair Oaks and Veolia Environnement.

Diversification Opportunities for Fair Oaks and Veolia Environnement

-0.82

Correlation Coefficient

Fair Oaks  Veolia Environnement

Pay attention - limited upside

The 3 months correlation between Fair and Veolia is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fair Oaks Income and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Fair Oaks 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 Fair Oaks Income 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 Fair Oaks i.e., Fair Oaks and Veolia Environnement go up and down completely randomly.

Pair Corralation between Fair Oaks and Veolia Environnement

Assuming the 90 days trading horizon Fair Oaks Income is expected to generate 0.42 times more return on investment than Veolia Environnement. However, Fair Oaks Income is 2.4 times less risky than Veolia Environnement. It trades about 0.13 of its potential returns per unit of risk. Veolia Environnement VE is currently generating about -0.12 per unit of risk. If you would invest  55.00  in Fair Oaks Income on October 23, 2024 and sell it today you would earn a total of  2.00  from holding Fair Oaks Income or generate 3.64% return on investment over 90 days.

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

Fair Oaks Income  vs.  Veolia Environnement VE

Fair Oaks Income

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fair Oaks Income are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Fair Oaks is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with Fair Oaks and Veolia Environnement

The main advantage of trading using opposite Fair Oaks and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fair Oaks 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.

The idea behind Fair Oaks Income and Veolia Environnement VE 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.