Correlation Between AXA SA and Bouygues
Can any of the company-specific risk be diversified away by investing in both AXA SA and Bouygues 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 AXA SA and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AXA SA and Bouygues SA, you can compare the effects of market volatilities on AXA SA and Bouygues 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 AXA SA with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXA SA and Bouygues.
Diversification Opportunities for AXA SA and Bouygues
Weak diversification
The 3 months correlation between AXA and Bouygues is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and AXA SA 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 AXA SA are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of AXA SA i.e., AXA SA and Bouygues go up and down completely randomly.
Pair Corralation between AXA SA and Bouygues
Assuming the 90 days horizon AXA SA is expected to under-perform the Bouygues. But the stock apears to be less risky and, when comparing its historical volatility, AXA SA is 1.3 times less risky than Bouygues. The stock trades about -0.18 of its potential returns per unit of risk. The Bouygues SA is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 2,976 in Bouygues SA on August 28, 2024 and sell it today you would lose (97.00) from holding Bouygues SA or give up 3.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AXA SA vs. Bouygues SA
Performance |
| Timeline |
| AXA SA |
| Bouygues SA |
AXA SA and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AXA SA and Bouygues
The main advantage of trading using opposite AXA SA and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' long position.| AXA SA vs. BNP Paribas SA | AXA SA vs. Sanofi SA | AXA SA vs. Credit Agricole SA | AXA SA vs. Societe Generale SA |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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