Correlation Between Airbus SE and General Dynamics
Can any of the company-specific risk be diversified away by investing in both Airbus SE and General Dynamics 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 SE and General Dynamics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus SE and General Dynamics, you can compare the effects of market volatilities on Airbus SE and General Dynamics 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 SE with a short position of General Dynamics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus SE and General Dynamics.
Diversification Opportunities for Airbus SE and General Dynamics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Airbus and General is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Airbus SE and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics and Airbus SE 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 SE are associated (or correlated) with General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Airbus SE i.e., Airbus SE and General Dynamics go up and down completely randomly.
Pair Corralation between Airbus SE and General Dynamics
Assuming the 90 days trading horizon Airbus SE is expected to generate 1.07 times more return on investment than General Dynamics. However, Airbus SE is 1.07 times more volatile than General Dynamics. It trades about 0.06 of its potential returns per unit of risk. General Dynamics is currently generating about 0.03 per unit of risk. If you would invest 10,993 in Airbus SE on September 14, 2024 and sell it today you would earn a total of 5,003 from holding Airbus SE or generate 45.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airbus SE vs. General Dynamics
Performance |
| Timeline |
| Airbus SE |
| General Dynamics |
Airbus SE and General Dynamics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbus SE and General Dynamics
The main advantage of trading using opposite Airbus SE and General Dynamics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus SE position performs unexpectedly, General Dynamics 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 General Dynamics will offset losses from the drop in General Dynamics' long position.| Airbus SE vs. General Dynamics | Airbus SE vs. Superior Plus Corp | Airbus SE vs. Origin Agritech | Airbus SE vs. INTUITIVE SURGICAL |
| General Dynamics vs. Airbus SE | General Dynamics vs. Superior Plus Corp | General Dynamics vs. Origin Agritech | General Dynamics vs. INTUITIVE SURGICAL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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