Correlation Between Legrand SA and Bouygues
Can any of the company-specific risk be diversified away by investing in both Legrand SA 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 Legrand SA and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Legrand SA and Bouygues SA, you can compare the effects of market volatilities on Legrand SA 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 Legrand SA with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Legrand SA and Bouygues.
Diversification Opportunities for Legrand SA and Bouygues
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Legrand and Bouygues is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Legrand SA and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Legrand SA 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 Legrand SA 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 Legrand SA i.e., Legrand SA and Bouygues go up and down completely randomly.
Pair Corralation between Legrand SA and Bouygues
Assuming the 90 days horizon Legrand SA is expected to under-perform the Bouygues. In addition to that, Legrand SA is 1.73 times more volatile than Bouygues SA. It trades about -0.24 of its total potential returns per unit of risk. Bouygues SA is currently generating about -0.19 per unit of volatility. If you would invest 2,976 in Bouygues SA on August 29, 2024 and sell it today you would lose (155.00) from holding Bouygues SA or give up 5.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Legrand SA vs. Bouygues SA
Performance |
| Timeline |
| Legrand SA |
| Bouygues SA |
Legrand SA and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Legrand SA and Bouygues
The main advantage of trading using opposite Legrand SA and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Legrand SA 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.| Legrand SA vs. Schneider Electric SE | Legrand SA vs. Publicis Groupe SA | Legrand SA vs. Pernod Ricard SA | Legrand SA vs. Compagnie Generale des |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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