Correlation Between Bouygues and Nexity
Can any of the company-specific risk be diversified away by investing in both Bouygues and Nexity 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 Nexity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Nexity, you can compare the effects of market volatilities on Bouygues and Nexity 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 Nexity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Nexity.
Diversification Opportunities for Bouygues and Nexity
Excellent diversification
The 3 months correlation between Bouygues and Nexity is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Nexity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexity 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 Nexity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexity has no effect on the direction of Bouygues i.e., Bouygues and Nexity go up and down completely randomly.
Pair Corralation between Bouygues and Nexity
Assuming the 90 days horizon Bouygues SA is expected to generate 0.53 times more return on investment than Nexity. However, Bouygues SA is 1.89 times less risky than Nexity. It trades about -0.13 of its potential returns per unit of risk. Nexity is currently generating about -0.42 per unit of risk. If you would invest 2,913 in Bouygues SA on August 31, 2024 and sell it today you would lose (101.00) from holding Bouygues SA or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA vs. Nexity
Performance |
| Timeline |
| Bouygues SA |
| Nexity |
Bouygues and Nexity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Nexity
The main advantage of trading using opposite Bouygues and Nexity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Nexity 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 Nexity will offset losses from the drop in Nexity's long position.| Bouygues vs. Vinci SA | Bouygues vs. Compagnie de Saint Gobain | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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