Correlation Between Butterfly Network and Bureau Veritas

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Can any of the company-specific risk be diversified away by investing in both Butterfly Network 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 Butterfly Network and Bureau Veritas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Butterfly Network and Bureau Veritas SA, you can compare the effects of market volatilities on Butterfly Network 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 Butterfly Network with a short position of Bureau Veritas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Butterfly Network and Bureau Veritas.

Diversification Opportunities for Butterfly Network and Bureau Veritas

-0.7
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Butterfly and Bureau is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Butterfly Network 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 Butterfly Network 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 Butterfly Network 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 Butterfly Network i.e., Butterfly Network and Bureau Veritas go up and down completely randomly.

Pair Corralation between Butterfly Network and Bureau Veritas

Given the investment horizon of 90 days Butterfly Network is expected to generate 4.65 times more return on investment than Bureau Veritas. However, Butterfly Network is 4.65 times more volatile than Bureau Veritas SA. It trades about 0.2 of its potential returns per unit of risk. Bureau Veritas SA is currently generating about -0.06 per unit of risk. If you would invest  191.00  in Butterfly Network on September 18, 2024 and sell it today you would earn a total of  169.00  from holding Butterfly Network or generate 88.48% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Butterfly Network  vs.  Bureau Veritas SA

 Performance 
       Timeline  
Butterfly Network 

Risk-Adjusted Performance

15 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Butterfly Network are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting essential indicators, Butterfly Network showed solid returns over the last few months and may actually be approaching a breakup point.
Bureau Veritas SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Bureau Veritas SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Bureau Veritas is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Butterfly Network and Bureau Veritas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Butterfly Network and Bureau Veritas

The main advantage of trading using opposite Butterfly Network and Bureau Veritas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Butterfly Network 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 Butterfly Network 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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