Correlation Between Air France and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Air France and Airbus Group 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 Air France and Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air France KLM SA and Airbus Group SE, you can compare the effects of market volatilities on Air France and Airbus Group 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 Air France with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Airbus Group.
Diversification Opportunities for Air France and Airbus Group
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Airbus is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE and Air France 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 Air France KLM SA are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Air France i.e., Air France and Airbus Group go up and down completely randomly.
Pair Corralation between Air France and Airbus Group
Assuming the 90 days horizon Air France KLM SA is expected to generate 2.29 times more return on investment than Airbus Group. However, Air France is 2.29 times more volatile than Airbus Group SE. It trades about 0.1 of its potential returns per unit of risk. Airbus Group SE is currently generating about 0.23 per unit of risk. If you would invest 767.00 in Air France KLM SA on November 5, 2024 and sell it today you would earn a total of 33.00 from holding Air France KLM SA or generate 4.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air France KLM SA vs. Airbus Group SE
Performance |
| Timeline |
| Air France KLM |
| Airbus Group SE |
Air France and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Airbus Group
The main advantage of trading using opposite Air France and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| Air France vs. Gaztransport Technigaz SAS | Air France vs. Soditech SA | Air France vs. CMG Cleantech SA | Air France vs. Groupe Pizzorno Environnement |
| Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM SA |
Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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