Correlation Between Bouygues and NV5 Global

Can any of the company-specific risk be diversified away by investing in both Bouygues and NV5 Global 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 Bouygues and NV5 Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bouygues SA and NV5 Global, you can compare the effects of market volatilities on Bouygues and NV5 Global 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 Bouygues with a short position of NV5 Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bouygues and NV5 Global.

Diversification Opportunities for Bouygues and NV5 Global

0.39

Correlation Coefficient

Bouygues  NV5 Global

Weak diversification

The 3 months correlation between Bouygues and NV5 is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Bouygues SA and NV5 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NV5 Global and Bouygues 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 Bouygues SA are associated (or correlated) with NV5 Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NV5 Global has no effect on the direction of Bouygues i.e., Bouygues and NV5 Global go up and down completely randomly.

Pair Corralation between Bouygues and NV5 Global

Assuming the 90 days horizon Bouygues SA is expected to under-perform the NV5 Global. In addition to that, Bouygues is 1.08 times more volatile than NV5 Global. It trades about -0.06 of its total potential returns per unit of risk. NV5 Global is currently generating about -0.05 per unit of volatility. If you would invest  2,312  in NV5 Global on August 31, 2024 and sell it today you would lose (153.00) from holding NV5 Global or give up 6.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bouygues SA  vs.  NV5 Global

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 latest unfluctuating performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

NV5 Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NV5 Global has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NV5 Global is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Bouygues and NV5 Global

The main advantage of trading using opposite Bouygues and NV5 Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bouygues position performs unexpectedly, NV5 Global 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 NV5 Global will offset losses from the drop in NV5 Global's long position.

The idea behind Bouygues SA and NV5 Global 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .