Correlation Between Thales SA and Bureau Veritas
Can any of the company-specific risk be diversified away by investing in both Thales SA and Bureau Veritas 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 Thales SA and Bureau Veritas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thales SA ADR and Bureau Veritas SA, you can compare the effects of market volatilities on Thales SA and Bureau Veritas 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 Thales SA with a short position of Bureau Veritas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Bureau Veritas.
Diversification Opportunities for Thales SA and Bureau Veritas
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Thales and Bureau is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA ADR and Bureau Veritas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bureau Veritas SA and Thales 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 Thales SA ADR are associated (or correlated) with Bureau Veritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bureau Veritas SA has no effect on the direction of Thales SA i.e., Thales SA and Bureau Veritas go up and down completely randomly.
Pair Corralation between Thales SA and Bureau Veritas
Assuming the 90 days horizon Thales SA ADR is expected to generate 1.19 times more return on investment than Bureau Veritas. However, Thales SA is 1.19 times more volatile than Bureau Veritas SA. It trades about 0.04 of its potential returns per unit of risk. Bureau Veritas SA is currently generating about 0.03 per unit of risk. If you would invest 2,362 in Thales SA ADR on August 28, 2024 and sell it today you would earn a total of 706.00 from holding Thales SA ADR or generate 29.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Thales SA ADR vs. Bureau Veritas SA
Performance |
| Timeline |
| Thales SA ADR |
| Bureau Veritas SA |
Thales SA and Bureau Veritas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thales SA and Bureau Veritas
The main advantage of trading using opposite Thales SA and Bureau Veritas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, Bureau Veritas 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 Bureau Veritas will offset losses from the drop in Bureau Veritas' long position.| Thales SA vs. MTU Aero Engines | Thales SA vs. Safran SA | Thales SA vs. Leonardo SpA ADR | Thales SA vs. Airbus Group NV |
| Bureau Veritas vs. Legrand SA ADR | Bureau Veritas vs. Teleperformance PK | Bureau Veritas vs. BANDAI NAMCO Holdings | Bureau Veritas vs. Thales SA ADR |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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