Correlation Between Christian Dior and Bouygues

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

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

Diversification Opportunities for Christian Dior and Bouygues

0.18

Correlation Coefficient

Christian Dior  Bouygues

Average diversification

The 3 months correlation between Christian and Bouygues is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Christian Dior SE and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and Christian Dior 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 Christian Dior SE 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 Christian Dior i.e., Christian Dior and Bouygues go up and down completely randomly.

Pair Corralation between Christian Dior and Bouygues

Assuming the 90 days trading horizon Christian Dior SE is expected to under-perform the Bouygues. In addition to that, Christian Dior is 1.62 times more volatile than Bouygues SA. It trades about -0.05 of its total potential returns per unit of risk. Bouygues SA is currently generating about -0.06 per unit of volatility. If you would invest  3,132  in Bouygues SA on September 23, 2024 and sell it today you would lose (313.00) from holding Bouygues SA or give up 9.99% of portfolio value over 90 days.

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

Christian Dior SE  vs.  Bouygues SA

Christian Dior SE

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Christian Dior SE are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak forward indicators, Christian Dior may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 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.

Pair Trading with Christian Dior and Bouygues

The main advantage of trading using opposite Christian Dior and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Christian Dior 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 Christian Dior SE 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.