Correlation Between Credit Agricole and Bouygues

Can any of the company-specific risk be diversified away by investing in both Credit Agricole 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 Credit Agricole and Bouygues into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Credit Agricole SA and Bouygues SA, you can compare the effects of market volatilities on Credit Agricole 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 Credit Agricole with a short position of Bouygues. Check out your portfolio center. Please also check ongoing floating volatility patterns of Credit Agricole and Bouygues.

Diversification Opportunities for Credit Agricole and Bouygues

0.66

Correlation Coefficient

Credit Agricole  Bouygues

Poor diversification

The 3 months correlation between Credit and Bouygues is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Credit Agricole SA and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Credit Agricole 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 Credit Agricole 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 Credit Agricole i.e., Credit Agricole and Bouygues go up and down completely randomly.

Pair Corralation between Credit Agricole and Bouygues

Assuming the 90 days trading horizon Credit Agricole SA is expected to under-perform the Bouygues. In addition to that, Credit Agricole is 1.16 times more volatile than Bouygues SA. It trades about -0.34 of its total potential returns per unit of risk. Bouygues SA is currently generating about -0.13 per unit of volatility. 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	100.0%
Values	Daily Returns

Credit Agricole SA  vs.  Bouygues SA

Credit Agricole SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Credit Agricole SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Bouygues SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bouygues SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Credit Agricole and Bouygues

The main advantage of trading using opposite Credit Agricole and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Credit Agricole 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.

The idea behind Credit Agricole SA and Bouygues SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.