Correlation Between Industria and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Industria and Airbus Group 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 Industria and Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industria de Diseno and Airbus Group SE, you can compare the effects of market volatilities on Industria and Airbus Group 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 Industria with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industria and Airbus Group.
Diversification Opportunities for Industria and Airbus Group
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Industria and Airbus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Industria de Diseno and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE and Industria 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 Industria de Diseno are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Industria i.e., Industria and Airbus Group go up and down completely randomly.
Pair Corralation between Industria and Airbus Group
Assuming the 90 days trading horizon Industria de Diseno is expected to generate 0.91 times more return on investment than Airbus Group. However, Industria de Diseno is 1.1 times less risky than Airbus Group. It trades about 0.13 of its potential returns per unit of risk. Airbus Group SE is currently generating about 0.04 per unit of risk. If you would invest 2,515 in Industria de Diseno on August 28, 2024 and sell it today you would earn a total of 2,787 from holding Industria de Diseno or generate 110.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industria de Diseno vs. Airbus Group SE
Performance |
| Timeline |
| Industria de Diseno |
| Airbus Group SE |
Industria and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industria and Airbus Group
The main advantage of trading using opposite Industria and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industria position performs unexpectedly, Airbus Group 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 Airbus Group will offset losses from the drop in Airbus Group's long position.| Industria vs. Iberdrola SA | Industria vs. Repsol | Industria vs. Banco Santander | Industria vs. ACS Actividades de |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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