Correlation Between Compagnie and Dassault Aviation
Can any of the company-specific risk be diversified away by investing in both Compagnie and Dassault Aviation 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 Compagnie and Dassault Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compagnie de Saint Gobain and Dassault Aviation SA, you can compare the effects of market volatilities on Compagnie and Dassault Aviation 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 Compagnie with a short position of Dassault Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Dassault Aviation.
Diversification Opportunities for Compagnie and Dassault Aviation
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Compagnie and Dassault is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Dassault Aviation SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dassault Aviation and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Dassault Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dassault Aviation has no effect on the direction of Compagnie i.e., Compagnie and Dassault Aviation go up and down completely randomly.
Pair Corralation between Compagnie and Dassault Aviation
Assuming the 90 days trading horizon Compagnie de Saint Gobain is expected to generate 0.85 times more return on investment than Dassault Aviation. However, Compagnie de Saint Gobain is 1.18 times less risky than Dassault Aviation. It trades about 0.17 of its potential returns per unit of risk. Dassault Aviation SA is currently generating about -0.07 per unit of risk. If you would invest 8,304 in Compagnie de Saint Gobain on August 28, 2024 and sell it today you would earn a total of 444.00 from holding Compagnie de Saint Gobain or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compagnie de Saint Gobain vs. Dassault Aviation SA
Performance |
| Timeline |
| Compagnie de Saint |
| Dassault Aviation |
Compagnie and Dassault Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compagnie and Dassault Aviation
The main advantage of trading using opposite Compagnie and Dassault Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compagnie position performs unexpectedly, Dassault Aviation 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 Dassault Aviation will offset losses from the drop in Dassault Aviation's long position.| Compagnie vs. Vinci SA | Compagnie vs. Air Liquide SA | Compagnie vs. Compagnie Generale des | Compagnie vs. Bouygues SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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