Correlation Between Airbus Group and Arrienda Rental

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

Diversification Opportunities for Airbus Group and Arrienda Rental

0.67

Correlation Coefficient

Airbus Group  Arrienda Rental

Poor diversification

The 3 months correlation between Airbus and Arrienda is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Arrienda Rental Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrienda Rental Prop 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 Arrienda Rental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrienda Rental Prop has no effect on the direction of Airbus Group i.e., Airbus Group and Arrienda Rental go up and down completely randomly.

Pair Corralation between Airbus Group and Arrienda Rental

Assuming the 90 days trading horizon Airbus Group SE is expected to generate 17.14 times more return on investment than Arrienda Rental. However, Airbus Group is 17.14 times more volatile than Arrienda Rental Properties. It trades about 0.19 of its potential returns per unit of risk. Arrienda Rental Properties is currently generating about 0.12 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  2,574  from holding Airbus Group SE or generate 19.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Airbus Group SE  vs.  Arrienda Rental Properties

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.

Arrienda Rental Prop

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Arrienda Rental Properties are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Arrienda Rental is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Airbus Group and Arrienda Rental

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

The idea behind Airbus Group SE and Arrienda Rental Properties 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.