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
Poor diversification
The 3 months correlation between Safran and Thales is 0.75. 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 1.16 times less return on investment than Thales SA. But when comparing it to its historical volatility, Safran SA is 1.4 times less risky than Thales SA. It trades about 0.66 of its potential returns per unit of risk. Thales SA ADR is currently generating about 0.55 of returns per unit of risk over similar time horizon. If you would invest 2,816 in Thales SA ADR on November 3, 2024 and sell it today you would earn a total of 417.00 from holding Thales SA ADR or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| 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. Airbus Group NV | Safran SA vs. Moog Inc | Safran SA vs. BAE Systems PLC | Safran SA vs. Airbus Group SE |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |