Correlation Between NV5 Global and Bouygues

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

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

Diversification Opportunities for NV5 Global and Bouygues

0.43

Correlation Coefficient

NV5 Global  Bouygues

Very weak diversification

The 3 months correlation between NV5 and Bouygues is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding NV5 Global and Bouygues SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bouygues SA and NV5 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 NV5 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 has no effect on the direction of NV5 Global i.e., NV5 Global and Bouygues go up and down completely randomly.

Pair Corralation between NV5 Global and Bouygues

Given the investment horizon of 90 days NV5 Global is expected to generate 0.93 times more return on investment than Bouygues. However, NV5 Global is 1.07 times less risky than Bouygues. It trades about -0.04 of its potential returns per unit of risk. Bouygues SA is currently generating about -0.06 per unit of risk. If you would invest  2,312  in NV5 Global on September 2, 2024 and sell it today you would lose (136.00) from holding NV5 Global or give up 5.88% of portfolio value over 90 days.

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

NV5 Global  vs.  Bouygues SA

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.

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.

Pair Trading with NV5 Global and Bouygues

The main advantage of trading using opposite NV5 Global and Bouygues positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NV5 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.

The idea behind NV5 Global 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.