Correlation Between Bouygues and Compagnie
Can any of the company-specific risk be diversified away by investing in both Bouygues and Compagnie 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 Compagnie into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bouygues SA and Compagnie de Saint Gobain, you can compare the effects of market volatilities on Bouygues and Compagnie 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 Compagnie. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and Compagnie.
Diversification Opportunities for Bouygues and Compagnie
Weak diversification
The 3 months correlation between Bouygues and Compagnie is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and Compagnie de Saint Gobain in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Compagnie de Saint 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 Compagnie. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Compagnie de Saint has no effect on the direction of Bouygues i.e., Bouygues and Compagnie go up and down completely randomly.
Pair Corralation between Bouygues and Compagnie
Assuming the 90 days horizon Bouygues SA is expected to under-perform the Compagnie. But the stock apears to be less risky and, when comparing its historical volatility, Bouygues SA is 1.19 times less risky than Compagnie. The stock trades about -0.04 of its potential returns per unit of risk. The Compagnie de Saint Gobain is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,824 in Compagnie de Saint Gobain on November 2, 2024 and sell it today you would earn a total of 1,234 from holding Compagnie de Saint Gobain or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bouygues SA vs. Compagnie de Saint Gobain
Performance |
| Timeline |
| Bouygues SA |
| Compagnie de Saint |
Bouygues and Compagnie Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bouygues and Compagnie
The main advantage of trading using opposite Bouygues and Compagnie positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, Compagnie 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 Compagnie will offset losses from the drop in Compagnie's long position.| Bouygues vs. Vinci SA | Bouygues vs. Compagnie de Saint Gobain | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE |
| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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