Correlation Between Liberty Media and Bouygues
Can any of the company-specific risk be diversified away by investing in both Liberty Media 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 Liberty Media and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media and Bouygues SA, you can compare the effects of market volatilities on Liberty Media 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 Liberty Media with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Bouygues.
Diversification Opportunities for Liberty Media and Bouygues
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Liberty and Bouygues is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Liberty Media 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 Liberty Media 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 Liberty Media i.e., Liberty Media and Bouygues go up and down completely randomly.
Pair Corralation between Liberty Media and Bouygues
Assuming the 90 days horizon Liberty Media is expected to generate 0.73 times more return on investment than Bouygues. However, Liberty Media is 1.37 times less risky than Bouygues. It trades about 0.36 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.14 per unit of risk. If you would invest 5,921 in Liberty Media on August 28, 2024 and sell it today you would earn a total of 1,308 from holding Liberty Media or generate 22.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Liberty Media vs. Bouygues SA
Performance |
| Timeline |
| Liberty Media |
| Bouygues SA |
Liberty Media and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Bouygues
The main advantage of trading using opposite Liberty Media and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media 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.| Liberty Media vs. Compania Cervecerias Unidas | Liberty Media vs. Supercom | Liberty Media vs. Anheuser Busch Inbev | Liberty Media vs. Jacobs Solutions |
| 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.
Other Complementary Tools
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |