Correlation Between Veolia Environnement and Take Two

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

Diversification Opportunities for Veolia Environnement and Take Two

-0.86

Correlation Coefficient

Veolia Environnement  Take Two

Pay attention - limited upside

The 3 months correlation between Veolia and Take is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Take Two Interactive Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Take Two Interactive 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 Take Two. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Take Two Interactive has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Take Two go up and down completely randomly.

Pair Corralation between Veolia Environnement and Take Two

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Take Two. But the stock apears to be less risky and, when comparing its historical volatility, Veolia Environnement VE is 1.3 times less risky than Take Two. The stock trades about -0.1 of its potential returns per unit of risk. The Take Two Interactive Software is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  16,123  in Take Two Interactive Software on August 31, 2024 and sell it today you would earn a total of  2,631  from holding Take Two Interactive Software or generate 16.32% return on investment over 90 days.

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

Veolia Environnement VE  vs.  Take Two Interactive Software

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 unsteady 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.

Take Two Interactive

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Take Two Interactive Software are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Take Two unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Veolia Environnement and Take Two

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

The idea behind Veolia Environnement VE and Take Two Interactive Software 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.