Correlation Between GM and Airbus Group
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Airbus Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Airbus Group SE, you can compare the effects of market volatilities on GM 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 GM with a short position of Airbus Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Airbus Group.
Diversification Opportunities for GM and Airbus Group
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GM and Airbus is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Airbus Group go up and down completely randomly.
Pair Corralation between GM and Airbus Group
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Airbus Group. In addition to that, GM is 1.69 times more volatile than Airbus Group SE. It trades about -0.05 of its total potential returns per unit of risk. Airbus Group SE is currently generating about 0.25 per unit of volatility. If you would invest 14,230 in Airbus Group SE on September 9, 2024 and sell it today you would earn a total of 1,286 from holding Airbus Group SE or generate 9.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 95.45% |
Values | Daily Returns |
General Motors vs. Airbus Group SE
Performance |
Timeline |
General Motors |
Airbus Group SE |
GM and Airbus Group Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Airbus Group
The main advantage of trading using opposite GM and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.Airbus Group vs. Safran SA | Airbus Group vs. LVMH Mot Hennessy | Airbus Group vs. BNP Paribas SA | Airbus Group vs. Air France KLM SA |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |