Correlation Between Airbus SE and Ichor Coal

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

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

Diversification Opportunities for Airbus SE and Ichor Coal

-0.34

Correlation Coefficient

Airbus SE  Ichor Coal

Very good diversification

The 3 months correlation between Airbus and Ichor is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Airbus SE and Ichor Coal NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ichor Coal NV and Airbus SE 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 SE are associated (or correlated) with Ichor Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ichor Coal NV has no effect on the direction of Airbus SE i.e., Airbus SE and Ichor Coal go up and down completely randomly.

Pair Corralation between Airbus SE and Ichor Coal

Assuming the 90 days trading horizon Airbus SE is expected to generate 18.14 times less return on investment than Ichor Coal. But when comparing it to its historical volatility, Airbus SE is 4.51 times less risky than Ichor Coal. It trades about 0.14 of its potential returns per unit of risk. Ichor Coal NV is currently generating about 0.54 of returns per unit of risk over similar time horizon. If you would invest  2.00  in Ichor Coal NV on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Ichor Coal NV or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.24%
Values	Daily Returns

Airbus SE  vs.  Ichor Coal NV

Airbus SE

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus SE are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Airbus SE reported solid returns over the last few months and may actually be approaching a breakup point.

Ichor Coal NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Coal NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Ichor Coal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Airbus SE and Ichor Coal

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

The idea behind Airbus SE and Ichor Coal NV 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..