Correlation Between WSP Global and Bouygues
Can any of the company-specific risk be diversified away by investing in both WSP Global 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 WSP Global and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WSP Global and Bouygues SA ADR, you can compare the effects of market volatilities on WSP Global 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 WSP Global with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of WSP Global and Bouygues.
Diversification Opportunities for WSP Global and Bouygues
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between WSP and Bouygues is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding WSP Global 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 WSP Global 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 WSP Global 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 WSP Global i.e., WSP Global and Bouygues go up and down completely randomly.
Pair Corralation between WSP Global and Bouygues
Assuming the 90 days horizon WSP Global is expected to under-perform the Bouygues. In addition to that, WSP Global is 1.53 times more volatile than Bouygues SA ADR. It trades about -0.08 of its total potential returns per unit of risk. Bouygues SA ADR is currently generating about 0.3 per unit of volatility. If you would invest 588.00 in Bouygues SA ADR on November 4, 2024 and sell it today you would earn a total of 45.00 from holding Bouygues SA ADR or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WSP Global vs. Bouygues SA ADR
Performance |
| Timeline |
| WSP Global |
| Bouygues SA ADR |
WSP Global and Bouygues Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WSP Global and Bouygues
The main advantage of trading using opposite WSP Global and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WSP Global 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.| WSP Global vs. George Weston Limited | WSP Global vs. Intact Financial | WSP Global vs. Metro Inc | WSP Global vs. Kingspan Group PLC |
| 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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