Correlation Between Veolia Environnement and ConocoPhillips

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

Diversification Opportunities for Veolia Environnement and ConocoPhillips

0.02

Correlation Coefficient

Veolia Environnement  ConocoPhillips

Significant diversification

The 3 months correlation between Veolia and ConocoPhillips is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Veolia Environnement SA and ConocoPhillips in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ConocoPhillips 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 ConocoPhillips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ConocoPhillips has no effect on the direction of Veolia Environnement i.e., Veolia Environnement and ConocoPhillips go up and down completely randomly.

Pair Corralation between Veolia Environnement and ConocoPhillips

Assuming the 90 days horizon Veolia Environnement SA is expected to generate 0.43 times more return on investment than ConocoPhillips. However, Veolia Environnement SA is 2.31 times less risky than ConocoPhillips. It trades about 0.04 of its potential returns per unit of risk. ConocoPhillips is currently generating about -0.01 per unit of risk. If you would invest  2,997  in Veolia Environnement SA on April 24, 2025 and sell it today you would earn a total of  63.00  from holding Veolia Environnement SA or generate 2.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Veolia Environnement SA  vs.  ConocoPhillips

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.

ConocoPhillips

Risk-Adjusted Performance

Very Weak

Over the last 90 days ConocoPhillips has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, ConocoPhillips 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 ConocoPhillips

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

The idea behind Veolia Environnement SA and ConocoPhillips 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.