Correlation Between Embraer SA and Triumph
Can any of the company-specific risk be diversified away by investing in both Embraer SA and Triumph 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 Embraer SA and Triumph into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embraer SA ADR and Triumph Group, you can compare the effects of market volatilities on Embraer SA and Triumph 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 Embraer SA with a short position of Triumph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embraer SA and Triumph.
Diversification Opportunities for Embraer SA and Triumph
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Embraer and Triumph is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Embraer SA ADR and Triumph Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Triumph Group and Embraer SA 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 Embraer SA ADR are associated (or correlated) with Triumph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Triumph Group has no effect on the direction of Embraer SA i.e., Embraer SA and Triumph go up and down completely randomly.
Pair Corralation between Embraer SA and Triumph
Considering the 90-day investment horizon Embraer SA is expected to generate 2.49 times less return on investment than Triumph. But when comparing it to its historical volatility, Embraer SA ADR is 1.58 times less risky than Triumph. It trades about 0.19 of its potential returns per unit of risk. Triumph Group is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 1,457 in Triumph Group on August 31, 2024 and sell it today you would earn a total of 468.00 from holding Triumph Group or generate 32.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Embraer SA ADR vs. Triumph Group
Performance |
| Timeline |
| Embraer SA ADR |
| Triumph Group |
Embraer SA and Triumph Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embraer SA and Triumph
The main advantage of trading using opposite Embraer SA and Triumph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embraer SA position performs unexpectedly, Triumph 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 Triumph will offset losses from the drop in Triumph's long position.| Embraer SA vs. HEICO | Embraer SA vs. Vertical Aerospace | Embraer SA vs. Rolls Royce Holdings plc | Embraer SA vs. Rocket Lab USA |
| Triumph vs. Mercury Systems | Triumph vs. Curtiss Wright | Triumph vs. Hexcel | Triumph vs. Ducommun Incorporated |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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