Correlation Between Digimarc and Bouygues
Can any of the company-specific risk be diversified away by investing in both Digimarc 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 Digimarc and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digimarc and Bouygues SA, you can compare the effects of market volatilities on Digimarc 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 Digimarc with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digimarc and Bouygues.
Diversification Opportunities for Digimarc and Bouygues
Excellent diversification
The 3 months correlation between Digimarc and Bouygues is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Digimarc and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Digimarc 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 Digimarc 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 Digimarc i.e., Digimarc and Bouygues go up and down completely randomly.
Pair Corralation between Digimarc and Bouygues
Given the investment horizon of 90 days Digimarc is expected to generate 3.59 times more return on investment than Bouygues. However, Digimarc is 3.59 times more volatile than Bouygues SA. It trades about 0.07 of its potential returns per unit of risk. Bouygues SA is currently generating about 0.06 per unit of risk. If you would invest 3,447 in Digimarc on November 1, 2024 and sell it today you would earn a total of 324.00 from holding Digimarc or generate 9.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Digimarc vs. Bouygues SA
Performance |
| Timeline |
| Digimarc |
| Bouygues SA |
Digimarc and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digimarc and Bouygues
The main advantage of trading using opposite Digimarc and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digimarc 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.The idea behind Digimarc and Bouygues SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bouygues vs. NV5 Global | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group | Bouygues vs. Comfort Systems USA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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