Correlation Between Veolia Environnement and NiSource

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

Diversification Opportunities for Veolia Environnement and NiSource

0.18

Correlation Coefficient

Veolia Environnement  NiSource

Average diversification

The 3 months correlation between Veolia and NiSource is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and NiSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NiSource 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 NiSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NiSource has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and NiSource go up and down completely randomly.

Pair Corralation between Veolia Environnement and NiSource

Assuming the 90 days horizon Veolia Environnement is expected to generate 1.46 times less return on investment than NiSource. But when comparing it to its historical volatility, Veolia Environnement SA is 1.26 times less risky than NiSource. It trades about 0.04 of its potential returns per unit of risk. NiSource is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,455  in NiSource on April 24, 2025 and sell it today you would earn a total of  105.00  from holding NiSource or generate 3.04% return on investment over 90 days.

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

Veolia Environnement SA  vs.  NiSource

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 3 (%) 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.

NiSource

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NiSource are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NiSource is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Veolia Environnement and NiSource

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

The idea behind Veolia Environnement SA and NiSource 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.