Correlation Between Airbus Group and Safran SA
Can any of the company-specific risk be diversified away by investing in both Airbus Group 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 Airbus Group and Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus Group SE and Safran SA, you can compare the effects of market volatilities on Airbus Group 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 Airbus Group with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and Safran SA.
Diversification Opportunities for Airbus Group and Safran SA
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airbus and Safran is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and Airbus Group 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 Airbus Group SE 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 Airbus Group i.e., Airbus Group and Safran SA go up and down completely randomly.
Pair Corralation between Airbus Group and Safran SA
Assuming the 90 days trading horizon Airbus Group SE is expected to under-perform the Safran SA. But the stock apears to be less risky and, when comparing its historical volatility, Airbus Group SE is 1.14 times less risky than Safran SA. The stock trades about -0.04 of its potential returns per unit of risk. The Safran SA is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 21,050 in Safran SA on August 24, 2024 and sell it today you would earn a total of 890.00 from holding Safran SA or generate 4.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airbus Group SE vs. Safran SA
Performance |
| Timeline |
| Airbus Group SE |
| Safran SA |
Airbus Group and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbus Group and Safran SA
The main advantage of trading using opposite Airbus Group and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group 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.| Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM SA |
| Safran SA vs. Thales SA | Safran SA vs. Vinci SA | Safran SA vs. Air Liquide SA | Safran SA vs. Dassault Systemes SE |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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