Correlation Between Veolia Environnement and Technip Energies

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

Diversification Opportunities for Veolia Environnement and Technip Energies

0.82

Correlation Coefficient

Veolia Environnement  Technip Energies

Very poor diversification

The 3 months correlation between Veolia and Technip is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Technip Energies BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technip Energies 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 Technip Energies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technip Energies has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Technip Energies go up and down completely randomly.

Pair Corralation between Veolia Environnement and Technip Energies

Assuming the 90 days trading horizon Veolia Environnement VE is expected to generate 0.53 times more return on investment than Technip Energies. However, Veolia Environnement VE is 1.89 times less risky than Technip Energies. It trades about 0.28 of its potential returns per unit of risk. Technip Energies BV is currently generating about 0.14 per unit of risk. If you would invest  2,742  in Veolia Environnement VE on December 20, 2024 and sell it today you would earn a total of  404.00  from holding Veolia Environnement VE or generate 14.73% return on investment over 90 days.

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

Veolia Environnement VE  vs.  Technip Energies BV

Veolia Environnement

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veolia Environnement VE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Veolia Environnement sustained solid returns over the last few months and may actually be approaching a breakup point.

Technip Energies

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technip Energies BV are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Technip Energies sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and Technip Energies

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

The idea behind Veolia Environnement VE and Technip Energies BV 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.