Correlation Between Airbus Group and Thales SA

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

Diversification Opportunities for Airbus Group and Thales SA

0.3
  Correlation Coefficient

Weak diversification

The 3 months correlation between Airbus and Thales is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and Thales SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thales 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 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 has no effect on the direction of Airbus Group i.e., Airbus Group and Thales SA go up and down completely randomly.

Pair Corralation between Airbus Group and Thales SA

Assuming the 90 days trading horizon Airbus Group SE is expected to generate 0.94 times more return on investment than Thales SA. However, Airbus Group SE is 1.06 times less risky than Thales SA. It trades about 0.16 of its potential returns per unit of risk. Thales SA is currently generating about -0.01 per unit of risk. If you would invest  13,174  in Airbus Group SE on September 5, 2024 and sell it today you would earn a total of  2,034  from holding Airbus Group SE or generate 15.44% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Airbus Group SE  vs.  Thales SA

 Performance 
JavaScript chart by amCharts 3.21.15SepOctNov -50510
JavaScript chart by amCharts 3.21.15AIR HO
       Timeline  
Airbus Group SE 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Airbus Group sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec125130135140145150155
Thales SA 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Thales SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Thales SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec140145150155160

Airbus Group and Thales SA Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.6-3.45-2.29-1.14-0.01931.172.413.654.886.12 0.050.100.15
JavaScript chart by amCharts 3.21.15AIR HO
       Returns  

Pair Trading with Airbus Group and Thales SA

The main advantage of trading using opposite Airbus Group and Thales SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group 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.
The idea behind Airbus Group SE and Thales 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.
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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