Correlation Between Veolia Environnement and Church Dwight

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

Diversification Opportunities for Veolia Environnement and Church Dwight

-0.74

Correlation Coefficient

Veolia Environnement  Church Dwight

Pay attention - limited upside

The 3 months correlation between Veolia and Church is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement VE and Church Dwight Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Church Dwight 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 Church Dwight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Church Dwight has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and Church Dwight go up and down completely randomly.

Pair Corralation between Veolia Environnement and Church Dwight

Assuming the 90 days trading horizon Veolia Environnement VE is expected to under-perform the Church Dwight. In addition to that, Veolia Environnement is 1.05 times more volatile than Church Dwight Co. It trades about -0.14 of its total potential returns per unit of risk. Church Dwight Co is currently generating about 0.22 per unit of volatility. If you would invest  10,107  in Church Dwight Co on September 4, 2024 and sell it today you would earn a total of  993.00  from holding Church Dwight Co or generate 9.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.35%
Values	Daily Returns

Veolia Environnement VE  vs.  Church Dwight Co

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.

Church Dwight

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Church Dwight Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Church Dwight is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Veolia Environnement and Church Dwight

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

The idea behind Veolia Environnement VE and Church Dwight Co 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.