Correlation Between Eve Holding and Dassault Aviation

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

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

Diversification Opportunities for Eve Holding and Dassault Aviation

-0.34

Correlation Coefficient

Eve Holding  Dassault Aviation

Very good diversification

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

Pair Corralation between Eve Holding and Dassault Aviation

Given the investment horizon of 90 days Eve Holding is expected to generate 1.59 times more return on investment than Dassault Aviation. However, Eve Holding is 1.59 times more volatile than Dassault Aviation SA. It trades about 0.23 of its potential returns per unit of risk. Dassault Aviation SA is currently generating about 0.02 per unit of risk. If you would invest  319.00  in Eve Holding on October 3, 2024 and sell it today you would earn a total of  237.00  from holding Eve Holding or generate 74.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Eve Holding  vs.  Dassault Aviation SA

Eve Holding

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Eve Holding are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Eve Holding showed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Eve Holding and Dassault Aviation

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

The idea behind Eve Holding and Dassault Aviation 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.