Correlation Between Bouygues and Invibes Advertising
Can any of the company-specific risk be diversified away by investing in both Bouygues and Invibes Advertising 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 Invibes Advertising into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Invibes Advertising NV, you can compare the effects of market volatilities on Bouygues and Invibes Advertising 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 Invibes Advertising. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Invibes Advertising.
Diversification Opportunities for Bouygues and Invibes Advertising
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bouygues and Invibes is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Invibes Advertising NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invibes Advertising 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 Invibes Advertising. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invibes Advertising has no effect on the direction of Bouygues i.e., Bouygues and Invibes Advertising go up and down completely randomly.
Pair Corralation between Bouygues and Invibes Advertising
Assuming the 90 days horizon Bouygues SA is expected to generate 0.45 times more return on investment than Invibes Advertising. However, Bouygues SA is 2.22 times less risky than Invibes Advertising. It trades about -0.05 of its potential returns per unit of risk. Invibes Advertising NV is currently generating about -0.32 per unit of risk. If you would invest 2,957 in Bouygues SA on September 13, 2024 and sell it today you would lose (82.00) from holding Bouygues SA or give up 2.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA vs. Invibes Advertising NV
Performance |
| Timeline |
| Bouygues SA |
| Invibes Advertising |
Bouygues and Invibes Advertising Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Invibes Advertising
The main advantage of trading using opposite Bouygues and Invibes Advertising positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Invibes Advertising 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 Invibes Advertising will offset losses from the drop in Invibes Advertising's long position.| Bouygues vs. Vinci SA | Bouygues vs. Eiffage SA | Bouygues vs. SPIE SA | Bouygues vs. Compagnie Industrielle et |
| Invibes Advertising vs. Bouygues SA | Invibes Advertising vs. Legrand SA | Invibes Advertising vs. Sodexo SA | Invibes Advertising vs. Compagnie de Saint Gobain |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |