Correlation Between Dassault Aviation and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Dassault Aviation and Airbus Group 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 Dassault Aviation and Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Aviation SA and Airbus Group SE, you can compare the effects of market volatilities on Dassault Aviation and Airbus Group 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 Dassault Aviation with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Aviation and Airbus Group.
Diversification Opportunities for Dassault Aviation and Airbus Group
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dassault and Airbus is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Aviation SA and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE and Dassault Aviation 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 Dassault Aviation SA are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Dassault Aviation i.e., Dassault Aviation and Airbus Group go up and down completely randomly.
Pair Corralation between Dassault Aviation and Airbus Group
Assuming the 90 days horizon Dassault Aviation is expected to generate 2.05 times less return on investment than Airbus Group. In addition to that, Dassault Aviation is 1.04 times more volatile than Airbus Group SE. It trades about 0.05 of its total potential returns per unit of risk. Airbus Group SE is currently generating about 0.12 per unit of volatility. If you would invest 13,974 in Airbus Group SE on August 31, 2024 and sell it today you would earn a total of 540.00 from holding Airbus Group SE or generate 3.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dassault Aviation SA vs. Airbus Group SE
Performance |
| Timeline |
| Dassault Aviation |
| Airbus Group SE |
Dassault Aviation and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Aviation and Airbus Group
The main advantage of trading using opposite Dassault Aviation and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Aviation position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| Dassault Aviation vs. Thales SA | Dassault Aviation vs. Dassault Systemes SE | Dassault Aviation vs. Safran SA | Dassault Aviation vs. Eiffage SA |
| Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM SA |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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