Correlation Between Bouygues and Great Lakes
Can any of the company-specific risk be diversified away by investing in both Bouygues and Great Lakes 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 Great Lakes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Great Lakes Dredge, you can compare the effects of market volatilities on Bouygues and Great Lakes 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 Great Lakes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Great Lakes.
Diversification Opportunities for Bouygues and Great Lakes
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bouygues and Great is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Great Lakes Dredge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Lakes Dredge 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 Great Lakes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Lakes Dredge has no effect on the direction of Bouygues i.e., Bouygues and Great Lakes go up and down completely randomly.
Pair Corralation between Bouygues and Great Lakes
Assuming the 90 days horizon Bouygues SA is expected to generate 1.25 times more return on investment than Great Lakes. However, Bouygues is 1.25 times more volatile than Great Lakes Dredge. It trades about 0.05 of its potential returns per unit of risk. Great Lakes Dredge is currently generating about 0.06 per unit of risk. If you would invest 2,910 in Bouygues SA on November 9, 2024 and sell it today you would earn a total of 275.00 from holding Bouygues SA or generate 9.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 14.2% |
| Values | Daily Returns |
Bouygues SA vs. Great Lakes Dredge
Performance |
| Timeline |
| Bouygues SA |
| Great Lakes Dredge |
Bouygues and Great Lakes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Great Lakes
The main advantage of trading using opposite Bouygues and Great Lakes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Great Lakes 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 Great Lakes will offset losses from the drop in Great Lakes' long position.| Bouygues vs. NV5 Global | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group | Bouygues vs. Comfort Systems USA |
| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
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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