Correlation Between Airbus SE and Textron
Can any of the company-specific risk be diversified away by investing in both Airbus SE and Textron 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 Textron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus SE and Textron, you can compare the effects of market volatilities on Airbus SE and Textron 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 Textron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus SE and Textron.
Diversification Opportunities for Airbus SE and Textron
Average diversification
The 3 months correlation between Airbus and Textron is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Airbus SE and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Airbus SE i.e., Airbus SE and Textron go up and down completely randomly.
Pair Corralation between Airbus SE and Textron
Assuming the 90 days trading horizon Airbus SE is expected to generate 1.21 times more return on investment than Textron. However, Airbus SE is 1.21 times more volatile than Textron. It trades about 0.17 of its potential returns per unit of risk. Textron is currently generating about 0.0 per unit of risk. If you would invest 3,220 in Airbus SE on September 12, 2024 and sell it today you would earn a total of 680.00 from holding Airbus SE or generate 21.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Airbus SE vs. Textron
Performance |
| Timeline |
| Airbus SE |
| Textron |
Airbus SE and Textron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbus SE and Textron
The main advantage of trading using opposite Airbus SE and Textron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus SE position performs unexpectedly, Textron 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 Textron will offset losses from the drop in Textron's long position.| Airbus SE vs. United Airlines Holdings | Airbus SE vs. American Airlines Group | Airbus SE vs. Tower One Wireless | Airbus SE vs. Geely Automobile Holdings |
| Textron vs. Spirent Communications plc | Textron vs. Lion One Metals | Textron vs. Ribbon Communications | Textron vs. Consolidated Communications Holdings |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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