Correlation Between Rheinmetall and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Rheinmetall 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 Rheinmetall and Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rheinmetall AG and Airbus Group NV, you can compare the effects of market volatilities on Rheinmetall 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 Rheinmetall with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rheinmetall and Airbus Group.
Diversification Opportunities for Rheinmetall and Airbus Group
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rheinmetall and Airbus is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Rheinmetall AG and Airbus Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group NV and Rheinmetall 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 Rheinmetall AG 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 NV has no effect on the direction of Rheinmetall i.e., Rheinmetall and Airbus Group go up and down completely randomly.
Pair Corralation between Rheinmetall and Airbus Group
Assuming the 90 days horizon Rheinmetall AG is expected to generate 1.46 times more return on investment than Airbus Group. However, Rheinmetall is 1.46 times more volatile than Airbus Group NV. It trades about 0.45 of its potential returns per unit of risk. Airbus Group NV is currently generating about 0.1 per unit of risk. If you would invest 50,280 in Rheinmetall AG on September 4, 2024 and sell it today you would earn a total of 15,870 from holding Rheinmetall AG or generate 31.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rheinmetall AG vs. Airbus Group NV
Performance |
| Timeline |
| Rheinmetall AG |
| Airbus Group NV |
Rheinmetall and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rheinmetall and Airbus Group
The main advantage of trading using opposite Rheinmetall and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rheinmetall 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.| Rheinmetall vs. Lockheed Martin | Rheinmetall vs. BAE Systems PLC | Rheinmetall vs. Qinetiq Group PLC | Rheinmetall vs. Leonardo SpA ADR |
| Airbus Group vs. Safran SA | Airbus Group vs. Moog Inc | Airbus Group vs. BAE Systems PLC | Airbus Group vs. Airbus Group SE |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |