Correlation Between Safran SA and Bantek
Can any of the company-specific risk be diversified away by investing in both Safran SA and Bantek 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 Bantek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Bantek Inc, you can compare the effects of market volatilities on Safran SA and Bantek 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 Bantek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Bantek.
Diversification Opportunities for Safran SA and Bantek
Excellent diversification
The 3 months correlation between Safran and Bantek is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Bantek Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bantek Inc 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 Bantek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bantek Inc has no effect on the direction of Safran SA i.e., Safran SA and Bantek go up and down completely randomly.
Pair Corralation between Safran SA and Bantek
Assuming the 90 days horizon Safran SA is expected to generate 42.31 times less return on investment than Bantek. But when comparing it to its historical volatility, Safran SA is 13.24 times less risky than Bantek. It trades about 0.08 of its potential returns per unit of risk. Bantek Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 0.12 in Bantek Inc on September 2, 2024 and sell it today you would earn a total of 0.11 from holding Bantek Inc or generate 91.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safran SA vs. Bantek Inc
Performance |
| Timeline |
| Safran SA |
| Bantek Inc |
Safran SA and Bantek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Bantek
The main advantage of trading using opposite Safran SA and Bantek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Bantek 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 Bantek will offset losses from the drop in Bantek's long position.| Safran SA vs. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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