Correlation Between Cboe UK and Veolia Environnement

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Can any of the company-specific risk be diversified away by investing in both Cboe UK and Veolia Environnement 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 Cboe UK and Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cboe UK Consumer and Veolia Environnement VE, you can compare the effects of market volatilities on Cboe UK and Veolia Environnement 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 Cboe UK with a short position of Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cboe UK and Veolia Environnement.

Diversification Opportunities for Cboe UK and Veolia Environnement

0.08
  Correlation Coefficient

Significant diversification

The 3 months correlation between Cboe and Veolia is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cboe UK Consumer and Veolia Environnement VE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement and Cboe UK 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 Cboe UK Consumer are associated (or correlated) with Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of Cboe UK i.e., Cboe UK and Veolia Environnement go up and down completely randomly.
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Pair Corralation between Cboe UK and Veolia Environnement

Assuming the 90 days trading horizon Cboe UK Consumer is expected to under-perform the Veolia Environnement. But the index apears to be less risky and, when comparing its historical volatility, Cboe UK Consumer is 1.26 times less risky than Veolia Environnement. The index trades about -0.12 of its potential returns per unit of risk. The Veolia Environnement VE is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,040  in Veolia Environnement VE on August 14, 2025 and sell it today you would lose (114.00) from holding Veolia Environnement VE or give up 3.75% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Cboe UK Consumer  vs.  Veolia Environnement VE

 Performance 
       Timeline  

Cboe UK and Veolia Environnement Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cboe UK and Veolia Environnement

The main advantage of trading using opposite Cboe UK and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cboe UK position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.
The idea behind Cboe UK Consumer and Veolia Environnement VE 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 Stocks Directory module to find actively traded stocks across global markets.

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