Correlation Between Airbus Group and Squirrel Media

Can any of the company-specific risk be diversified away by investing in both Airbus Group and Squirrel Media 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 Squirrel Media 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 Squirrel Media SA, you can compare the effects of market volatilities on Airbus Group and Squirrel Media 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 Squirrel Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and Squirrel Media.

Diversification Opportunities for Airbus Group and Squirrel Media

-0.7

Correlation Coefficient

Airbus Group  Squirrel Media

Excellent diversification

The 3 months correlation between Airbus and Squirrel is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Squirrel Media SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Squirrel Media SA 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 Squirrel Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Squirrel Media SA has no effect on the direction of Airbus Group i.e., Airbus Group and Squirrel Media go up and down completely randomly.

Pair Corralation between Airbus Group and Squirrel Media

Assuming the 90 days trading horizon Airbus Group SE is expected to generate 0.9 times more return on investment than Squirrel Media. However, Airbus Group SE is 1.11 times less risky than Squirrel Media. It trades about 0.19 of its potential returns per unit of risk. Squirrel Media SA is currently generating about -0.15 per unit of risk. If you would invest  13,080  in Airbus Group SE on September 12, 2024 and sell it today you would earn a total of  2,530  from holding Airbus Group SE or generate 19.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Airbus Group SE  vs.  Squirrel Media SA

Airbus Group SE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 15 (%) 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.

Squirrel Media SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Squirrel Media SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Airbus Group and Squirrel Media

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

The idea behind Airbus Group SE and Squirrel Media SA 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.