Correlation Between Badger Infrastructure and Vinci SA

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

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

Diversification Opportunities for Badger Infrastructure and Vinci SA

0.22

Correlation Coefficient

Badger Infrastructure  Vinci SA

Modest diversification

The 3 months correlation between Badger and Vinci is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Badger Infrastructure Solution and Vinci SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinci SA ADR and Badger Infrastructure 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 Badger Infrastructure Solutions are associated (or correlated) with Vinci SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinci SA ADR has no effect on the direction of Badger Infrastructure i.e., Badger Infrastructure and Vinci SA go up and down completely randomly.

Pair Corralation between Badger Infrastructure and Vinci SA

Assuming the 90 days horizon Badger Infrastructure Solutions is expected to generate 1.83 times more return on investment than Vinci SA. However, Badger Infrastructure is 1.83 times more volatile than Vinci SA ADR. It trades about -0.01 of its potential returns per unit of risk. Vinci SA ADR is currently generating about -0.17 per unit of risk. If you would invest  2,611  in Badger Infrastructure Solutions on September 22, 2024 and sell it today you would lose (91.00) from holding Badger Infrastructure Solutions or give up 3.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Badger Infrastructure Solution  vs.  Vinci SA ADR

Badger Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Badger Infrastructure Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Badger Infrastructure is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Vinci SA ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinci SA ADR 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Badger Infrastructure and Vinci SA

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

The idea behind Badger Infrastructure Solutions and Vinci SA 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.