Correlation Between AAR Corp and Safran SA
Can any of the company-specific risk be diversified away by investing in both AAR Corp 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 AAR Corp and Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAR Corp and Safran SA, you can compare the effects of market volatilities on AAR Corp 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 AAR Corp with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAR Corp and Safran SA.
Diversification Opportunities for AAR Corp and Safran SA
Significant diversification
The 3 months correlation between AAR and Safran is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AAR Corp and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and AAR Corp 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 AAR Corp 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 AAR Corp i.e., AAR Corp and Safran SA go up and down completely randomly.
Pair Corralation between AAR Corp and Safran SA
Considering the 90-day investment horizon AAR Corp is expected to generate 1.92 times more return on investment than Safran SA. However, AAR Corp is 1.92 times more volatile than Safran SA. It trades about 0.22 of its potential returns per unit of risk. Safran SA is currently generating about 0.07 per unit of risk. If you would invest 6,056 in AAR Corp on August 31, 2024 and sell it today you would earn a total of 896.00 from holding AAR Corp or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AAR Corp vs. Safran SA
Performance |
| Timeline |
| AAR Corp |
| Safran SA |
AAR Corp and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAR Corp and Safran SA
The main advantage of trading using opposite AAR Corp and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAR Corp 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.| AAR Corp vs. Curtiss Wright | AAR Corp vs. Hexcel | AAR Corp vs. Moog Inc | AAR Corp vs. Ducommun Incorporated |
| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities |