Correlation Between Airbus SE and Option Care

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

By analyzing existing cross correlation between Airbus SE and Option Care Health, you can compare the effects of market volatilities on Airbus SE and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus SE and Option Care.

Diversification Opportunities for Airbus SE and Option Care

-0.51

Correlation Coefficient

Airbus SE  Option Care

Excellent diversification

The 3 months correlation between Airbus and Option is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Airbus SE and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of Airbus SE i.e., Airbus SE and Option Care go up and down completely randomly.

Pair Corralation between Airbus SE and Option Care

Assuming the 90 days trading horizon Airbus SE is expected to generate 2.6 times less return on investment than Option Care. But when comparing it to its historical volatility, Airbus SE is 1.64 times less risky than Option Care. It trades about 0.11 of its potential returns per unit of risk. Option Care Health is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,180  in Option Care Health on October 11, 2024 and sell it today you would earn a total of  120.00  from holding Option Care Health or generate 5.5% return on investment over 90 days.

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

Airbus SE  vs.  Option Care Health

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.

Option Care Health

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Option Care Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Airbus SE and Option Care

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

The idea behind Airbus SE and Option Care Health 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.