Correlation Between Air France and Safran SA
Can any of the company-specific risk be diversified away by investing in both Air France and Safran 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 Air France and Safran SA 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 Safran SA, you can compare the effects of market volatilities on Air France and Safran 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 Air France with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air France and Safran SA.
Diversification Opportunities for Air France and Safran SA
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Safran is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Air France KLM SA and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA 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 Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Air France i.e., Air France and Safran SA go up and down completely randomly.
Pair Corralation between Air France and Safran SA
Assuming the 90 days horizon Air France KLM SA is expected to under-perform the Safran SA. In addition to that, Air France is 1.88 times more volatile than Safran SA. It trades about -0.07 of its total potential returns per unit of risk. Safran SA is currently generating about 0.06 per unit of volatility. If you would invest 19,175 in Safran SA on August 27, 2024 and sell it today you would earn a total of 2,835 from holding Safran SA or generate 14.78% 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. Safran SA
Performance |
| Timeline |
| Air France KLM |
| Safran SA |
Air France and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air France and Safran SA
The main advantage of trading using opposite Air France and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air France position performs unexpectedly, Safran 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 Safran SA will offset losses from the drop in Safran SA's long position.| Air France vs. Manitou BF SA | Air France vs. Ossiam Minimum Variance | Air France vs. Granite 3x LVMH | Air France vs. 21Shares Polkadot ETP |
| Safran SA vs. Prodways Group SA | Safran SA vs. Claranova SE | Safran SA vs. DBV Technologies SA | Safran SA vs. Manitou BF 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
Other Complementary Tools
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets |