Correlation Between Dassault Aviation and Airbus Group

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

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

Diversification Opportunities for Dassault Aviation and Airbus Group

-0.31

Correlation Coefficient

Dassault Aviation  Airbus Group

Very good diversification

The 3 months correlation between Dassault and Airbus is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dassault Aviation SA and Airbus Group SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group SE and Dassault Aviation 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 Dassault Aviation SA are associated (or correlated) with Airbus Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airbus Group SE has no effect on the direction of Dassault Aviation i.e., Dassault Aviation and Airbus Group go up and down completely randomly.

Pair Corralation between Dassault Aviation and Airbus Group

Assuming the 90 days horizon Dassault Aviation is expected to generate 3.48 times less return on investment than Airbus Group. In addition to that, Dassault Aviation is 1.11 times more volatile than Airbus Group SE. It trades about 0.02 of its total potential returns per unit of risk. Airbus Group SE is currently generating about 0.08 per unit of volatility. If you would invest  14,851  in Airbus Group SE on September 30, 2024 and sell it today you would earn a total of  1,570  from holding Airbus Group SE or generate 10.57% return on investment over 90 days.

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

Dassault Aviation SA  vs.  Airbus Group SE

Dassault Aviation

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dassault Aviation SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dassault Aviation is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Airbus Group SE

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Airbus Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dassault Aviation and Airbus Group

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

The idea behind Dassault Aviation SA and Airbus Group SE 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.