Correlation Between Babcock International and Bouygues
Can any of the company-specific risk be diversified away by investing in both Babcock International and Bouygues 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 Babcock International and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock International Group and Bouygues SA ADR, you can compare the effects of market volatilities on Babcock International and Bouygues 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 Babcock International with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock International and Bouygues.
Diversification Opportunities for Babcock International and Bouygues
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Babcock and Bouygues is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Babcock International Group and Bouygues SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA ADR and Babcock International 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 Babcock International Group are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA ADR has no effect on the direction of Babcock International i.e., Babcock International and Bouygues go up and down completely randomly.
Pair Corralation between Babcock International and Bouygues
Assuming the 90 days horizon Babcock International Group is expected to generate 2.61 times more return on investment than Bouygues. However, Babcock International is 2.61 times more volatile than Bouygues SA ADR. It trades about 0.06 of its potential returns per unit of risk. Bouygues SA ADR is currently generating about 0.01 per unit of risk. If you would invest 338.00 in Babcock International Group on August 31, 2024 and sell it today you would earn a total of 348.00 from holding Babcock International Group or generate 102.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.13% |
| Values | Daily Returns |
Babcock International Group vs. Bouygues SA ADR
Performance |
| Timeline |
| Babcock International |
| Bouygues SA ADR |
Babcock International and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock International and Bouygues
The main advantage of trading using opposite Babcock International and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock International position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' long position.| Babcock International vs. ACS Actividades de | Babcock International vs. ACS Actividades De | Babcock International vs. Bouygues SA ADR |
| Bouygues vs. SNC Lavalin Group | Bouygues vs. WSP Global | Bouygues vs. Willdan Group | Bouygues vs. Comfort Systems USA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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