Correlation Between Dassault Aviation and Thales SA
Can any of the company-specific risk be diversified away by investing in both Dassault Aviation and Thales 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 Dassault Aviation and Thales SA 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 Thales SA, you can compare the effects of market volatilities on Dassault Aviation and Thales 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 Dassault Aviation with a short position of Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Aviation and Thales SA.
Diversification Opportunities for Dassault Aviation and Thales SA
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dassault and Thales is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Aviation SA and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA has no effect on the direction of Dassault Aviation i.e., Dassault Aviation and Thales SA go up and down completely randomly.
Pair Corralation between Dassault Aviation and Thales SA
Assuming the 90 days horizon Dassault Aviation SA is expected to generate 1.14 times more return on investment than Thales SA. However, Dassault Aviation is 1.14 times more volatile than Thales SA. It trades about 0.05 of its potential returns per unit of risk. Thales SA is currently generating about 0.04 per unit of risk. If you would invest 15,313 in Dassault Aviation SA on November 2, 2024 and sell it today you would earn a total of 6,247 from holding Dassault Aviation SA or generate 40.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Aviation SA vs. Thales SA
Performance |
| Timeline |
| Dassault Aviation |
| Thales SA |
Dassault Aviation and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Aviation and Thales SA
The main advantage of trading using opposite Dassault Aviation and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Aviation position performs unexpectedly, Thales 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 Thales SA will offset losses from the drop in Thales SA's long position.| Dassault Aviation vs. Thales SA | Dassault Aviation vs. Dassault Systemes SE | Dassault Aviation vs. Safran SA | Dassault Aviation vs. Eiffage SA |
| Thales SA vs. Safran SA | Thales SA vs. Dassault Systemes SE | Thales SA vs. Dassault Aviation SA | Thales SA vs. Vinci 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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