Correlation Between Bilfinger and Travis Perkins

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

By analyzing existing cross correlation between Bilfinger SE ADR and Travis Perkins PLC, you can compare the effects of market volatilities on Bilfinger and Travis Perkins 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 Bilfinger with a short position of Travis Perkins. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bilfinger and Travis Perkins.

Diversification Opportunities for Bilfinger and Travis Perkins

-0.8

Correlation Coefficient

Bilfinger  Travis Perkins

Pay attention - limited upside

The 3 months correlation between Bilfinger and Travis is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bilfinger SE ADR and Travis Perkins PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Travis Perkins PLC and Bilfinger 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 Bilfinger SE ADR are associated (or correlated) with Travis Perkins. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Travis Perkins PLC has no effect on the direction of Bilfinger i.e., Bilfinger and Travis Perkins go up and down completely randomly.

Pair Corralation between Bilfinger and Travis Perkins

Assuming the 90 days horizon Bilfinger SE ADR is expected to generate 1.68 times more return on investment than Travis Perkins. However, Bilfinger is 1.68 times more volatile than Travis Perkins PLC. It trades about 0.17 of its potential returns per unit of risk. Travis Perkins PLC is currently generating about -0.1 per unit of risk. If you would invest  942.00  in Bilfinger SE ADR on December 30, 2024 and sell it today you would earn a total of  473.00  from holding Bilfinger SE ADR or generate 50.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.38%
Values	Daily Returns

Bilfinger SE ADR  vs.  Travis Perkins PLC

Bilfinger SE ADR

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bilfinger SE ADR are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Bilfinger showed solid returns over the last few months and may actually be approaching a breakup point.

Travis Perkins PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travis Perkins PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bilfinger and Travis Perkins

The main advantage of trading using opposite Bilfinger and Travis Perkins positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bilfinger position performs unexpectedly, Travis Perkins 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 Travis Perkins will offset losses from the drop in Travis Perkins' long position.

The idea behind Bilfinger SE ADR and Travis Perkins PLC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.