Correlation Between Great Lakes and Bouygues
Can any of the company-specific risk be diversified away by investing in both Great Lakes and Bouygues 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 Great Lakes and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Great Lakes Dredge and Bouygues SA, you can compare the effects of market volatilities on Great Lakes and Bouygues 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 Great Lakes with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Great Lakes and Bouygues.
Diversification Opportunities for Great Lakes and Bouygues
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Great and Bouygues is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Great Lakes Dredge and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Great Lakes 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 Great Lakes Dredge are associated (or correlated) with Bouygues. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bouygues SA has no effect on the direction of Great Lakes i.e., Great Lakes and Bouygues go up and down completely randomly.
Pair Corralation between Great Lakes and Bouygues
Given the investment horizon of 90 days Great Lakes is expected to generate 5.51 times less return on investment than Bouygues. In addition to that, Great Lakes is 2.71 times more volatile than Bouygues SA. It trades about 0.03 of its total potential returns per unit of risk. Bouygues SA is currently generating about 0.42 per unit of volatility. If you would invest 2,956 in Bouygues SA on November 9, 2024 and sell it today you would earn a total of 229.00 from holding Bouygues SA or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Great Lakes Dredge vs. Bouygues SA
Performance |
| Timeline |
| Great Lakes Dredge |
| Bouygues SA |
Great Lakes and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Great Lakes and Bouygues
The main advantage of trading using opposite Great Lakes and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Great Lakes position performs unexpectedly, Bouygues 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 Bouygues will offset losses from the drop in Bouygues' long position.| Great Lakes vs. Primoris Services | Great Lakes vs. Granite Construction Incorporated | Great Lakes vs. MYR Group | Great Lakes vs. Southland Holdings |
| Bouygues vs. NV5 Global | Bouygues vs. Matrix Service Co | Bouygues vs. MYR Group | Bouygues vs. Comfort Systems USA |
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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