Correlation Between NYSE Composite and Bureau Veritas

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

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

Diversification Opportunities for NYSE Composite and Bureau Veritas

0.47

Correlation Coefficient

NYSE Composite  Bureau Veritas

Very weak diversification

The 3 months correlation between NYSE and Bureau is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Bureau Veritas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bureau Veritas SA and NYSE Composite 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 NYSE Composite are associated (or correlated) with Bureau Veritas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bureau Veritas SA has no effect on the direction of NYSE Composite i.e., NYSE Composite and Bureau Veritas go up and down completely randomly.

Pair Corralation between NYSE Composite and Bureau Veritas

Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.14 times less return on investment than Bureau Veritas. But when comparing it to its historical volatility, NYSE Composite is 2.09 times less risky than Bureau Veritas. It trades about 0.02 of its potential returns per unit of risk. Bureau Veritas SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  6,004  in Bureau Veritas SA on December 29, 2024 and sell it today you would earn a total of  103.00  from holding Bureau Veritas SA or generate 1.72% return on investment over 90 days.

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

NYSE Composite  vs.  Bureau Veritas SA

Pair Trading with NYSE Composite and Bureau Veritas

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

The idea behind NYSE Composite and Bureau Veritas 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.