Correlation Between Worldline and Bouygues
Can any of the company-specific risk be diversified away by investing in both Worldline 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 Worldline and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Worldline SA and Bouygues SA, you can compare the effects of market volatilities on Worldline 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 Worldline with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worldline and Bouygues.
Diversification Opportunities for Worldline and Bouygues
Poor diversification
The 3 months correlation between Worldline and Bouygues is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Worldline SA and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Worldline 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 Worldline 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 Worldline i.e., Worldline and Bouygues go up and down completely randomly.
Pair Corralation between Worldline and Bouygues
Assuming the 90 days trading horizon Worldline SA is expected to generate 2.29 times more return on investment than Bouygues. However, Worldline is 2.29 times more volatile than Bouygues SA. It trades about -0.02 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.1 per unit of risk. If you would invest 651.00 in Worldline SA on August 24, 2024 and sell it today you would lose (14.00) from holding Worldline SA or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Worldline SA vs. Bouygues SA
Performance |
| Timeline |
| Worldline SA |
| Bouygues SA |
Worldline and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Worldline and Bouygues
The main advantage of trading using opposite Worldline and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldline 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.| Worldline vs. Atos SE | Worldline vs. Teleperformance SE | Worldline vs. Dassault Systemes SE | Worldline vs. Capgemini SE |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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