Correlation Between Airbus Group and Cox ABG

Can any of the company-specific risk be diversified away by investing in both Airbus Group and Cox ABG 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 Airbus Group and Cox ABG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Airbus Group SE and Cox ABG Group, you can compare the effects of market volatilities on Airbus Group and Cox ABG 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 Airbus Group with a short position of Cox ABG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and Cox ABG.

Diversification Opportunities for Airbus Group and Cox ABG

-0.27

Correlation Coefficient

Airbus Group  Cox ABG

Very good diversification

The 3 months correlation between Airbus and Cox is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Cox ABG Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cox ABG Group and Airbus Group 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 Airbus Group SE are associated (or correlated) with Cox ABG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cox ABG Group has no effect on the direction of Airbus Group i.e., Airbus Group and Cox ABG go up and down completely randomly.

Pair Corralation between Airbus Group and Cox ABG

Assuming the 90 days trading horizon Airbus Group SE is expected to generate 0.71 times more return on investment than Cox ABG. However, Airbus Group SE is 1.42 times less risky than Cox ABG. It trades about 0.19 of its potential returns per unit of risk. Cox ABG Group is currently generating about 0.05 per unit of risk. If you would invest  14,184  in Airbus Group SE on October 9, 2024 and sell it today you would earn a total of  1,652  from holding Airbus Group SE or generate 11.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	87.18%
Values	Daily Returns

Airbus Group SE  vs.  Cox ABG Group

Airbus Group SE

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Airbus Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cox ABG Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cox ABG Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Cox ABG may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Airbus Group and Cox ABG

The main advantage of trading using opposite Airbus Group and Cox ABG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group position performs unexpectedly, Cox ABG 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 Cox ABG will offset losses from the drop in Cox ABG's long position.

The idea behind Airbus Group SE and Cox ABG Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.