Correlation Between Quanta Services and Bouygues
Can any of the company-specific risk be diversified away by investing in both Quanta Services 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 Quanta Services and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quanta Services and Bouygues SA ADR, you can compare the effects of market volatilities on Quanta Services 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 Quanta Services with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quanta Services and Bouygues.
Diversification Opportunities for Quanta Services and Bouygues
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Quanta and Bouygues is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Quanta Services and Bouygues SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA ADR and Quanta Services 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 Quanta Services 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 ADR has no effect on the direction of Quanta Services i.e., Quanta Services and Bouygues go up and down completely randomly.
Pair Corralation between Quanta Services and Bouygues
Considering the 90-day investment horizon Quanta Services is expected to generate 1.85 times more return on investment than Bouygues. However, Quanta Services is 1.85 times more volatile than Bouygues SA ADR. It trades about 0.24 of its potential returns per unit of risk. Bouygues SA ADR is currently generating about 0.31 per unit of risk. If you would invest 32,728 in Quanta Services on October 24, 2024 and sell it today you would earn a total of 3,072 from holding Quanta Services or generate 9.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Quanta Services vs. Bouygues SA ADR
Performance |
| Timeline |
| Quanta Services |
| Bouygues SA ADR |
Quanta Services and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quanta Services and Bouygues
The main advantage of trading using opposite Quanta Services and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quanta Services 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.| Quanta Services vs. MYR Group | Quanta Services vs. Dycom Industries | Quanta Services vs. EMCOR Group | Quanta Services vs. Comfort Systems USA |
| Bouygues vs. SNC Lavalin Group | Bouygues vs. WSP Global | Bouygues vs. Willdan 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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