Correlation Between Safran SA and HEICO
Can any of the company-specific risk be diversified away by investing in both Safran SA and HEICO 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 HEICO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and HEICO, you can compare the effects of market volatilities on Safran SA and HEICO 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 HEICO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and HEICO.
Diversification Opportunities for Safran SA and HEICO
Very weak diversification
The 3 months correlation between Safran and HEICO is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and HEICO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEICO 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 HEICO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEICO has no effect on the direction of Safran SA i.e., Safran SA and HEICO go up and down completely randomly.
Pair Corralation between Safran SA and HEICO
Assuming the 90 days horizon Safran SA is expected to generate 19.25 times less return on investment than HEICO. But when comparing it to its historical volatility, Safran SA is 1.0 times less risky than HEICO. It trades about 0.02 of its potential returns per unit of risk. HEICO is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 19,436 in HEICO on August 29, 2024 and sell it today you would earn a total of 2,051 from holding HEICO or generate 10.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Safran SA vs. HEICO
Performance |
| Timeline |
| Safran SA |
| HEICO |
Safran SA and HEICO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and HEICO
The main advantage of trading using opposite Safran SA and HEICO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, HEICO 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 HEICO will offset losses from the drop in HEICO's long position.| Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Park Electrochemical | Safran SA vs. Triumph Group |
| HEICO vs. Vertical Aerospace | HEICO vs. Rolls Royce Holdings plc | HEICO vs. Embraer SA ADR | HEICO vs. Rocket Lab USA |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |