Correlation Between Television Francaise and Bouygues
Can any of the company-specific risk be diversified away by investing in both Television Francaise 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 Television Francaise and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Television Francaise 1 and Bouygues SA, you can compare the effects of market volatilities on Television Francaise 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 Television Francaise with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Television Francaise and Bouygues.
Diversification Opportunities for Television Francaise and Bouygues
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Television and Bouygues is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Television Francaise 1 and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Television Francaise 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 Television Francaise 1 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 Television Francaise i.e., Television Francaise and Bouygues go up and down completely randomly.
Pair Corralation between Television Francaise and Bouygues
Assuming the 90 days trading horizon Television Francaise 1 is expected to under-perform the Bouygues. But the stock apears to be less risky and, when comparing its historical volatility, Television Francaise 1 is 1.02 times less risky than Bouygues. The stock trades about -0.24 of its potential returns per unit of risk. The Bouygues SA is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 2,913 in Bouygues SA on August 31, 2024 and sell it today you would lose (101.00) from holding Bouygues SA or give up 3.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Television Francaise 1 vs. Bouygues SA
Performance |
| Timeline |
| Television Francaise |
| Bouygues SA |
Television Francaise and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Television Francaise and Bouygues
The main advantage of trading using opposite Television Francaise and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Television Francaise 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.| Television Francaise vs. Mtropole Tlvision SA | Television Francaise vs. Lagardere SCA | Television Francaise vs. Bouygues SA | Television Francaise vs. Publicis Groupe SA |
| Bouygues vs. Vinci SA | Bouygues vs. Compagnie de Saint Gobain | Bouygues vs. Orange SA | Bouygues vs. Veolia Environnement VE |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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