Correlation Between Safran SA and Airbus Group
Can any of the company-specific risk be diversified away by investing in both Safran SA 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 Safran SA and Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Airbus Group SE, you can compare the effects of market volatilities on Safran SA 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 Safran SA with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Airbus Group.
Diversification Opportunities for Safran SA and Airbus Group
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Safran and Airbus is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA 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 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 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 Safran SA i.e., Safran SA and Airbus Group go up and down completely randomly.
Pair Corralation between Safran SA and Airbus Group
Assuming the 90 days horizon Safran SA is expected to generate 0.67 times more return on investment than Airbus Group. However, Safran SA is 1.49 times less risky than Airbus Group. It trades about 0.06 of its potential returns per unit of risk. Airbus Group SE is currently generating about -0.08 per unit of risk. If you would invest 5,653 in Safran SA on August 24, 2024 and sell it today you would earn a total of 109.00 from holding Safran SA or generate 1.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Safran SA vs. Airbus Group SE
Performance |
| Timeline |
| Safran SA |
| Airbus Group SE |
Safran SA and Airbus Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Airbus Group
The main advantage of trading using opposite Safran SA and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA 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.| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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