Correlation Between Airbus SE and Swatch
Can any of the company-specific risk be diversified away by investing in both Airbus SE and Swatch 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 Swatch into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus SE and The Swatch Group, you can compare the effects of market volatilities on Airbus SE and Swatch 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 Swatch. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus SE and Swatch.
Diversification Opportunities for Airbus SE and Swatch
Excellent diversification
The 3 months correlation between Airbus and Swatch is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Airbus SE and The Swatch Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Swatch Group 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 Swatch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Swatch Group has no effect on the direction of Airbus SE i.e., Airbus SE and Swatch go up and down completely randomly.
Pair Corralation between Airbus SE and Swatch
Assuming the 90 days trading horizon Airbus SE is expected to generate 0.52 times more return on investment than Swatch. However, Airbus SE is 1.93 times less risky than Swatch. It trades about 0.05 of its potential returns per unit of risk. The Swatch Group is currently generating about -0.02 per unit of risk. If you would invest 2,778 in Airbus SE on October 28, 2024 and sell it today you would earn a total of 1,342 from holding Airbus SE or generate 48.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Airbus SE vs. The Swatch Group
Performance |
| Timeline |
| Airbus SE |
| Swatch Group |
Airbus SE and Swatch Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbus SE and Swatch
The main advantage of trading using opposite Airbus SE and Swatch positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus SE position performs unexpectedly, Swatch 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 Swatch will offset losses from the drop in Swatch's long position.| Airbus SE vs. STMicroelectronics NV | Airbus SE vs. Broadcom | Airbus SE vs. UMC Electronics Co | Airbus SE vs. NAGOYA RAILROAD |
| Swatch vs. BRIT AMER TOBACCO | Swatch vs. NORTHEAST UTILITIES | Swatch vs. United Utilities Group | Swatch vs. Constellation Software |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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