Correlation Between Bouygues and Balfour Beatty
Can any of the company-specific risk be diversified away by investing in both Bouygues and Balfour Beatty 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 Balfour Beatty into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA ADR and Balfour Beatty PLC, you can compare the effects of market volatilities on Bouygues and Balfour Beatty 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 Balfour Beatty. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Balfour Beatty.
Diversification Opportunities for Bouygues and Balfour Beatty
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bouygues and Balfour is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA ADR and Balfour Beatty PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balfour Beatty PLC 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 ADR are associated (or correlated) with Balfour Beatty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balfour Beatty PLC has no effect on the direction of Bouygues i.e., Bouygues and Balfour Beatty go up and down completely randomly.
Pair Corralation between Bouygues and Balfour Beatty
Assuming the 90 days horizon Bouygues is expected to generate 7.77 times less return on investment than Balfour Beatty. But when comparing it to its historical volatility, Bouygues SA ADR is 2.05 times less risky than Balfour Beatty. It trades about 0.01 of its potential returns per unit of risk. Balfour Beatty PLC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 860.00 in Balfour Beatty PLC on August 31, 2024 and sell it today you would earn a total of 162.00 from holding Balfour Beatty PLC or generate 18.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.62% |
| Values | Daily Returns |
Bouygues SA ADR vs. Balfour Beatty PLC
Performance |
| Timeline |
| Bouygues SA ADR |
| Balfour Beatty PLC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bouygues and Balfour Beatty Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Balfour Beatty
The main advantage of trading using opposite Bouygues and Balfour Beatty positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Balfour Beatty 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 Balfour Beatty will offset losses from the drop in Balfour Beatty's long position.| Bouygues vs. SNC Lavalin Group | Bouygues vs. WSP Global | Bouygues vs. Willdan Group | Bouygues vs. Comfort Systems USA |
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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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