Correlation Between Bouygues and Travis Perkins
Can any of the company-specific risk be diversified away by investing in both Bouygues and Travis Perkins 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 Travis Perkins 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 Travis Perkins PLC, you can compare the effects of market volatilities on Bouygues and Travis Perkins 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 Travis Perkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Travis Perkins.
Diversification Opportunities for Bouygues and Travis Perkins
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bouygues and Travis is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA ADR and Travis Perkins PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travis Perkins 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 Travis Perkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travis Perkins PLC has no effect on the direction of Bouygues i.e., Bouygues and Travis Perkins go up and down completely randomly.
Pair Corralation between Bouygues and Travis Perkins
Assuming the 90 days horizon Bouygues SA ADR is expected to under-perform the Travis Perkins. But the pink sheet apears to be less risky and, when comparing its historical volatility, Bouygues SA ADR is 1.34 times less risky than Travis Perkins. The pink sheet trades about -0.31 of its potential returns per unit of risk. The Travis Perkins PLC is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 1,054 in Travis Perkins PLC on September 4, 2024 and sell it today you would lose (85.00) from holding Travis Perkins PLC or give up 8.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA ADR vs. Travis Perkins PLC
Performance |
| Timeline |
| Bouygues SA ADR |
| Travis Perkins PLC |
Bouygues and Travis Perkins Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Travis Perkins
The main advantage of trading using opposite Bouygues and Travis Perkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Travis Perkins 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 Travis Perkins will offset losses from the drop in Travis Perkins' long position.| Bouygues vs. Travis Perkins PLC | Bouygues vs. Antelope Enterprise Holdings | Bouygues vs. Intelligent Living Application | Bouygues vs. Beacon Roofing Supply |
| Travis Perkins vs. Atlas Engineered Products | Travis Perkins vs. Antelope Enterprise Holdings | Travis Perkins vs. Intelligent Living Application | Travis Perkins vs. Armstrong World Industries |
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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