Correlation Between Safran SA and Dassault Systemes
Can any of the company-specific risk be diversified away by investing in both Safran SA and Dassault Systemes 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 Safran SA and Dassault Systemes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Dassault Systemes SE, you can compare the effects of market volatilities on Safran SA and Dassault Systemes 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 Safran SA with a short position of Dassault Systemes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Dassault Systemes.
Diversification Opportunities for Safran SA and Dassault Systemes
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Safran and Dassault is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Dassault Systemes SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Systemes and Safran 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 Safran SA are associated (or correlated) with Dassault Systemes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Systemes has no effect on the direction of Safran SA i.e., Safran SA and Dassault Systemes go up and down completely randomly.
Pair Corralation between Safran SA and Dassault Systemes
Assuming the 90 days trading horizon Safran SA is expected to generate 0.83 times more return on investment than Dassault Systemes. However, Safran SA is 1.21 times less risky than Dassault Systemes. It trades about 0.1 of its potential returns per unit of risk. Dassault Systemes SE is currently generating about 0.01 per unit of risk. If you would invest 12,995 in Safran SA on November 2, 2024 and sell it today you would earn a total of 10,845 from holding Safran SA or generate 83.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safran SA vs. Dassault Systemes SE
Performance |
| Timeline |
| Safran SA |
| Dassault Systemes |
Safran SA and Dassault Systemes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Dassault Systemes
The main advantage of trading using opposite Safran SA and Dassault Systemes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Dassault Systemes 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 Systemes will offset losses from the drop in Dassault Systemes' long position.| Safran SA vs. Thales SA | Safran SA vs. Vinci SA | Safran SA vs. Air Liquide SA | Safran SA vs. Dassault Systemes SE |
| Dassault Systemes vs. Thales SA | Dassault Systemes vs. Safran SA | Dassault Systemes vs. Air Liquide SA | Dassault Systemes vs. Capgemini 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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