Correlation Between Bouygues and Eiffage SA
Can any of the company-specific risk be diversified away by investing in both Bouygues and Eiffage SA 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 Eiffage SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Eiffage SA, you can compare the effects of market volatilities on Bouygues and Eiffage SA 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 Eiffage SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Eiffage SA.
Diversification Opportunities for Bouygues and Eiffage SA
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Bouygues and Eiffage is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Eiffage SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eiffage SA 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 Eiffage SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eiffage SA has no effect on the direction of Bouygues i.e., Bouygues and Eiffage SA go up and down completely randomly.
Pair Corralation between Bouygues and Eiffage SA
Assuming the 90 days horizon Bouygues SA is expected to under-perform the Eiffage SA. In addition to that, Bouygues is 1.09 times more volatile than Eiffage SA. It trades about -0.11 of its total potential returns per unit of risk. Eiffage SA is currently generating about -0.11 per unit of volatility. If you would invest 8,718 in Eiffage SA on August 25, 2024 and sell it today you would lose (250.00) from holding Eiffage SA or give up 2.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA vs. Eiffage SA
Performance |
| Timeline |
| Bouygues SA |
| Eiffage SA |
Bouygues and Eiffage SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Eiffage SA
The main advantage of trading using opposite Bouygues and Eiffage SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Eiffage SA 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 Eiffage SA will offset losses from the drop in Eiffage SA's long position.| Bouygues vs. Vinci SA | Bouygues vs. Compagnie de Saint Gobain | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE |
| Eiffage SA vs. SQLI SA | Eiffage SA vs. Foncire Volta | Eiffage SA vs. Moulinvest | Eiffage SA vs. Manitou BF 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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