Correlation Between Veolia Environnement and Crosswood

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

Diversification Opportunities for Veolia Environnement and Crosswood

-0.4

Correlation Coefficient

Veolia Environnement  Crosswood

Very good diversification

The 3 months correlation between Veolia and Crosswood is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Crosswood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Crosswood 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 Crosswood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Crosswood has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Crosswood go up and down completely randomly.

Pair Corralation between Veolia Environnement and Crosswood

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Crosswood. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 3.65 times less risky than Crosswood. The stock trades about -0.25 of its potential returns per unit of risk. The Crosswood is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  935.00  in Crosswood on October 12, 2024 and sell it today you would earn a total of  135.00  from holding Crosswood or generate 14.44% return on investment over 90 days.

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

Veolia Environnement VE  vs.  Crosswood

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. Despite latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Crosswood

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Crosswood are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Crosswood sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and Crosswood

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

The idea behind Veolia Environnement VE and Crosswood 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.