Correlation Between Dassault Aviation and Charwood Energy
Can any of the company-specific risk be diversified away by investing in both Dassault Aviation and Charwood Energy 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 Charwood Energy 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 Charwood Energy SA, you can compare the effects of market volatilities on Dassault Aviation and Charwood Energy 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 Charwood Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Aviation and Charwood Energy.
Diversification Opportunities for Dassault Aviation and Charwood Energy
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dassault and Charwood is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Aviation SA and Charwood Energy SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charwood Energy SA 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 Charwood Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charwood Energy SA has no effect on the direction of Dassault Aviation i.e., Dassault Aviation and Charwood Energy go up and down completely randomly.
Pair Corralation between Dassault Aviation and Charwood Energy
Assuming the 90 days horizon Dassault Aviation is expected to generate 5.51 times less return on investment than Charwood Energy. But when comparing it to its historical volatility, Dassault Aviation SA is 6.57 times less risky than Charwood Energy. It trades about 0.31 of its potential returns per unit of risk. Charwood Energy SA is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 220.00 in Charwood Energy SA on November 2, 2024 and sell it today you would earn a total of 120.00 from holding Charwood Energy SA or generate 54.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dassault Aviation SA vs. Charwood Energy SA
Performance |
| Timeline |
| Dassault Aviation |
| Charwood Energy SA |
Dassault Aviation and Charwood Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Aviation and Charwood Energy
The main advantage of trading using opposite Dassault Aviation and Charwood Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Aviation position performs unexpectedly, Charwood Energy 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 Charwood Energy will offset losses from the drop in Charwood Energy's long position.| Dassault Aviation vs. Thales SA | Dassault Aviation vs. Dassault Systemes SE | Dassault Aviation vs. Safran SA | Dassault Aviation vs. Eiffage SA |
| Charwood Energy vs. Hydrogene De France | Charwood Energy vs. Hydrogen Refueling Solutions | Charwood Energy vs. Neoen SA | Charwood Energy vs. Manitou BF 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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