Correlation Between Safran SA and Thales SA
Can any of the company-specific risk be diversified away by investing in both Safran SA and Thales SA 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 Thales SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safran SA and Thales SA ADR, you can compare the effects of market volatilities on Safran SA and Thales SA 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 Thales SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safran SA and Thales SA.
Diversification Opportunities for Safran SA and Thales SA
Modest diversification
The 3 months correlation between Safran and Thales is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Safran SA and Thales SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales SA ADR 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 Thales SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thales SA ADR has no effect on the direction of Safran SA i.e., Safran SA and Thales SA go up and down completely randomly.
Pair Corralation between Safran SA and Thales SA
Assuming the 90 days horizon Safran SA is expected to generate 0.83 times more return on investment than Thales SA. However, Safran SA is 1.21 times less risky than Thales SA. It trades about 0.1 of its potential returns per unit of risk. Thales SA ADR is currently generating about 0.02 per unit of risk. If you would invest 3,749 in Safran SA on August 28, 2024 and sell it today you would earn a total of 1,984 from holding Safran SA or generate 52.92% 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. Thales SA ADR
Performance |
| Timeline |
| Safran SA |
| Thales SA ADR |
Safran SA and Thales SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safran SA and Thales SA
The main advantage of trading using opposite Safran SA and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safran SA position performs unexpectedly, Thales SA 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 Thales SA will offset losses from the drop in Thales SA's long position.| Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Park Electrochemical | Safran SA vs. Triumph Group |
| Thales SA vs. MTU Aero Engines | Thales SA vs. Safran SA | Thales SA vs. Leonardo SpA ADR | Thales SA vs. Airbus Group NV |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Stocks Directory Find actively traded stocks across global markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |