Correlation Between Travis Perkins and Bilfinger

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

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

Diversification Opportunities for Travis Perkins and Bilfinger

-0.01

Correlation Coefficient

Travis Perkins  Bilfinger

Good diversification

The 3 months correlation between Travis and Bilfinger is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Travis Perkins PLC and Bilfinger SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bilfinger SE ADR and Travis Perkins 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 Travis Perkins PLC are associated (or correlated) with Bilfinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bilfinger SE ADR has no effect on the direction of Travis Perkins i.e., Travis Perkins and Bilfinger go up and down completely randomly.

Pair Corralation between Travis Perkins and Bilfinger

Assuming the 90 days horizon Travis Perkins PLC is expected to under-perform the Bilfinger. But the pink sheet apears to be less risky and, when comparing its historical volatility, Travis Perkins PLC is 1.5 times less risky than Bilfinger. The pink sheet trades about -0.14 of its potential returns per unit of risk. The Bilfinger SE ADR is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  942.00  in Bilfinger SE ADR on December 1, 2024 and sell it today you would earn a total of  193.00  from holding Bilfinger SE ADR or generate 20.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	93.75%
Values	Daily Returns

Travis Perkins PLC  vs.  Bilfinger SE ADR

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.

Bilfinger SE ADR

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bilfinger SE ADR are ranked lower than 10 (%) 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.

Pair Trading with Travis Perkins and Bilfinger

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

The idea behind Travis Perkins PLC and Bilfinger SE ADR 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.