Correlation Between SHELL PLC and Airbus SE
Can any of the company-specific risk be diversified away by investing in both SHELL PLC and Airbus SE 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 SHELL PLC and Airbus SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SHELL PLC WI and Airbus SE, you can compare the effects of market volatilities on SHELL PLC and Airbus SE 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 SHELL PLC with a short position of Airbus SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of SHELL PLC and Airbus SE.
Diversification Opportunities for SHELL PLC and Airbus SE
Weak diversification
The 3 months correlation between SHELL and Airbus is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding SHELL PLC WI and Airbus SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus SE and SHELL PLC 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 SHELL PLC WI are associated (or correlated) with Airbus SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus SE has no effect on the direction of SHELL PLC i.e., SHELL PLC and Airbus SE go up and down completely randomly.
Pair Corralation between SHELL PLC and Airbus SE
Assuming the 90 days horizon SHELL PLC WI is expected to generate 0.77 times more return on investment than Airbus SE. However, SHELL PLC WI is 1.29 times less risky than Airbus SE. It trades about 0.07 of its potential returns per unit of risk. Airbus SE is currently generating about -0.01 per unit of risk. If you would invest 6,131 in SHELL PLC WI on August 24, 2024 and sell it today you would earn a total of 119.00 from holding SHELL PLC WI or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SHELL PLC WI vs. Airbus SE
Performance |
| Timeline |
| SHELL PLC WI |
| Airbus SE |
SHELL PLC and Airbus SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SHELL PLC and Airbus SE
The main advantage of trading using opposite SHELL PLC and Airbus SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SHELL PLC position performs unexpectedly, Airbus SE 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 SE will offset losses from the drop in Airbus SE's long position.| SHELL PLC vs. CHINA EDUCATION GROUP | SHELL PLC vs. Adtalem Global Education | SHELL PLC vs. AUSTEVOLL SEAFOOD | SHELL PLC vs. PT Indofood Sukses |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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