Correlation Between Dassault Systemes and Safran SA
Can any of the company-specific risk be diversified away by investing in both Dassault Systemes and Safran 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 Systemes and Safran SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dassault Systemes SE and Safran SA, you can compare the effects of market volatilities on Dassault Systemes and Safran 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 Systemes with a short position of Safran SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dassault Systemes and Safran SA.
Diversification Opportunities for Dassault Systemes and Safran SA
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dassault and Safran is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Systemes SE and Safran SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safran SA and Dassault Systemes 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 Systemes SE are associated (or correlated) with Safran SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safran SA has no effect on the direction of Dassault Systemes i.e., Dassault Systemes and Safran SA go up and down completely randomly.
Pair Corralation between Dassault Systemes and Safran SA
Assuming the 90 days trading horizon Dassault Systemes is expected to generate 35.08 times less return on investment than Safran SA. In addition to that, Dassault Systemes is 1.33 times more volatile than Safran SA. It trades about 0.0 of its total potential returns per unit of risk. Safran SA is currently generating about 0.11 per unit of volatility. If you would invest 11,366 in Safran SA on August 28, 2024 and sell it today you would earn a total of 10,454 from holding Safran SA or generate 91.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dassault Systemes SE vs. Safran SA
Performance |
| Timeline |
| Dassault Systemes |
| Safran SA |
Dassault Systemes and Safran SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dassault Systemes and Safran SA
The main advantage of trading using opposite Dassault Systemes and Safran SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dassault Systemes position performs unexpectedly, Safran 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 Safran SA will offset losses from the drop in Safran SA's long position.| Dassault Systemes vs. Thales SA | Dassault Systemes vs. Safran SA | Dassault Systemes vs. Air Liquide SA | Dassault Systemes vs. Capgemini SE |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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