Correlation Between Bouygues and Pernod Ricard
Can any of the company-specific risk be diversified away by investing in both Bouygues and Pernod Ricard 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 Pernod Ricard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Pernod Ricard SA, you can compare the effects of market volatilities on Bouygues and Pernod Ricard 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 Pernod Ricard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Pernod Ricard.
Diversification Opportunities for Bouygues and Pernod Ricard
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bouygues and Pernod is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Pernod Ricard SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pernod Ricard 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 Pernod Ricard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pernod Ricard SA has no effect on the direction of Bouygues i.e., Bouygues and Pernod Ricard go up and down completely randomly.
Pair Corralation between Bouygues and Pernod Ricard
Assuming the 90 days horizon Bouygues SA is expected to generate 0.79 times more return on investment than Pernod Ricard. However, Bouygues SA is 1.27 times less risky than Pernod Ricard. It trades about -0.11 of its potential returns per unit of risk. Pernod Ricard SA is currently generating about -0.45 per unit of risk. If you would invest 2,977 in Bouygues SA on August 25, 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 | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Bouygues SA vs. Pernod Ricard SA
Performance |
| Timeline |
| Bouygues SA |
| Pernod Ricard SA |
Bouygues and Pernod Ricard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Pernod Ricard
The main advantage of trading using opposite Bouygues and Pernod Ricard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Pernod Ricard 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 Pernod Ricard will offset losses from the drop in Pernod Ricard's long position.| Bouygues vs. Vinci SA | Bouygues vs. Compagnie de Saint Gobain | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE |
| Pernod Ricard vs. Robertet SA | Pernod Ricard vs. Virbac SA | Pernod Ricard vs. Thermador Groupe SA | Pernod Ricard vs. Elis 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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