Correlation Between Bouygues and ENGlobal
Can any of the company-specific risk be diversified away by investing in both Bouygues and ENGlobal 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 ENGlobal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and ENGlobal, you can compare the effects of market volatilities on Bouygues and ENGlobal 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 ENGlobal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and ENGlobal.
Diversification Opportunities for Bouygues and ENGlobal
Significant diversification
The 3 months correlation between Bouygues and ENGlobal is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and ENGlobal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENGlobal 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 ENGlobal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENGlobal has no effect on the direction of Bouygues i.e., Bouygues and ENGlobal go up and down completely randomly.
Pair Corralation between Bouygues and ENGlobal
Assuming the 90 days horizon Bouygues SA is expected to under-perform the ENGlobal. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bouygues SA is 1.31 times less risky than ENGlobal. The pink sheet trades about -0.14 of its potential returns per unit of risk. The ENGlobal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 131.00 in ENGlobal on August 31, 2024 and sell it today you would earn a total of 3.00 from holding ENGlobal or generate 2.29% 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. ENGlobal
Performance |
| Timeline |
| Bouygues SA |
| ENGlobal |
Bouygues and ENGlobal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and ENGlobal
The main advantage of trading using opposite Bouygues and ENGlobal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, ENGlobal 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 ENGlobal will offset losses from the drop in ENGlobal's long position.| Bouygues vs. Orion Group Holdings | Bouygues vs. Agrify Corp | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group |
| ENGlobal vs. Fuel Tech | ENGlobal vs. Polar Power | ENGlobal vs. Ocean Power Technologies | ENGlobal vs. Pioneer Power Solutions |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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