Correlation Between Thales SA and Dassault Aviation
Can any of the company-specific risk be diversified away by investing in both Thales SA and Dassault Aviation 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 Thales SA and Dassault Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thales SA and Dassault Aviation SA, you can compare the effects of market volatilities on Thales SA and Dassault Aviation 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 Thales SA with a short position of Dassault Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thales SA and Dassault Aviation.
Diversification Opportunities for Thales SA and Dassault Aviation
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Thales and Dassault is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Thales SA and Dassault Aviation SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Aviation and Thales 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 Thales SA are associated (or correlated) with Dassault Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Aviation has no effect on the direction of Thales SA i.e., Thales SA and Dassault Aviation go up and down completely randomly.
Pair Corralation between Thales SA and Dassault Aviation
Assuming the 90 days horizon Thales SA is expected to under-perform the Dassault Aviation. But the stock apears to be less risky and, when comparing its historical volatility, Thales SA is 1.03 times less risky than Dassault Aviation. The stock trades about -0.07 of its potential returns per unit of risk. The Dassault Aviation SA is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 19,390 in Dassault Aviation SA on September 2, 2024 and sell it today you would lose (550.00) from holding Dassault Aviation SA or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thales SA vs. Dassault Aviation SA
Performance |
| Timeline |
| Thales SA |
| Dassault Aviation |
Thales SA and Dassault Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thales SA and Dassault Aviation
The main advantage of trading using opposite Thales SA and Dassault Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thales SA position performs unexpectedly, Dassault Aviation 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 Dassault Aviation will offset losses from the drop in Dassault Aviation's long position.| Thales SA vs. Safran SA | Thales SA vs. Dassault Systemes SE | Thales SA vs. Dassault Aviation SA | Thales SA vs. Vinci SA |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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