Correlation Between Bouygues and Babcock International
Can any of the company-specific risk be diversified away by investing in both Bouygues and Babcock International 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 Bouygues and Babcock International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Babcock International Group, you can compare the effects of market volatilities on Bouygues and Babcock International 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 Bouygues with a short position of Babcock International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Babcock International.
Diversification Opportunities for Bouygues and Babcock International
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bouygues and Babcock is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Babcock International Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Babcock International and Bouygues 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 Bouygues SA are associated (or correlated) with Babcock International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Babcock International has no effect on the direction of Bouygues i.e., Bouygues and Babcock International go up and down completely randomly.
Pair Corralation between Bouygues and Babcock International
Assuming the 90 days horizon Bouygues SA is expected to under-perform the Babcock International. In addition to that, Bouygues is 1.64 times more volatile than Babcock International Group. It trades about -0.14 of its total potential returns per unit of risk. Babcock International Group is currently generating about 0.07 per unit of volatility. If you would invest 668.00 in Babcock International Group on August 31, 2024 and sell it today you would earn a total of 18.00 from holding Babcock International Group or generate 2.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA vs. Babcock International Group
Performance |
| Timeline |
| Bouygues SA |
| Babcock International |
Bouygues and Babcock International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Babcock International
The main advantage of trading using opposite Bouygues and Babcock International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Babcock International 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 Babcock International will offset losses from the drop in Babcock International's long position.| Bouygues vs. Orion Group Holdings | Bouygues vs. Agrify Corp | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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