Correlation Between Veolia Environnement and BJs Wholesale

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

By analyzing existing cross correlation between Veolia Environnement SA and BJs Wholesale Club, you can compare the effects of market volatilities on Veolia Environnement and BJs Wholesale 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 BJs Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Veolia Environnement and BJs Wholesale.

Diversification Opportunities for Veolia Environnement and BJs Wholesale

0.29

Correlation Coefficient

Veolia Environnement  BJs Wholesale

Modest diversification

The 3 months correlation between Veolia and BJs is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and BJs Wholesale Club in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Wholesale Club 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 SA are associated (or correlated) with BJs Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Wholesale Club has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and BJs Wholesale go up and down completely randomly.

Pair Corralation between Veolia Environnement and BJs Wholesale

Assuming the 90 days horizon Veolia Environnement is expected to generate 1.24 times less return on investment than BJs Wholesale. But when comparing it to its historical volatility, Veolia Environnement SA is 1.27 times less risky than BJs Wholesale. It trades about 0.07 of its potential returns per unit of risk. BJs Wholesale Club is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,000  in BJs Wholesale Club on December 1, 2024 and sell it today you would earn a total of  500.00  from holding BJs Wholesale Club or generate 5.56% return on investment over 90 days.

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

Veolia Environnement SA  vs.  BJs Wholesale Club

Veolia Environnement

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Veolia Environnement SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Veolia Environnement is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

BJs Wholesale Club

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BJs Wholesale Club are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, BJs Wholesale may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Veolia Environnement and BJs Wholesale

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

The idea behind Veolia Environnement SA and BJs Wholesale Club 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.