Correlation Between Huntington Ingalls and Airbus Group

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

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

Diversification Opportunities for Huntington Ingalls and Airbus Group

-0.6

Correlation Coefficient

Huntington Ingalls  Airbus Group

Excellent diversification

The 3 months correlation between Huntington and Airbus is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Huntington Ingalls Industries 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 Huntington Ingalls 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 Huntington Ingalls Industries 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 Huntington Ingalls i.e., Huntington Ingalls and Airbus Group go up and down completely randomly.

Pair Corralation between Huntington Ingalls and Airbus Group

Considering the 90-day investment horizon Huntington Ingalls Industries is expected to under-perform the Airbus Group. In addition to that, Huntington Ingalls is 1.15 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 0.06 per unit of volatility. If you would invest  14,327  in Airbus Group SE on September 30, 2024 and sell it today you would earn a total of  2,094  from holding Airbus Group SE or generate 14.62% return on investment over 90 days.

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

Huntington Ingalls Industries  vs.  Airbus Group SE

Huntington Ingalls

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huntington Ingalls Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

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 Huntington Ingalls and Airbus Group

The main advantage of trading using opposite Huntington Ingalls and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huntington Ingalls 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 Huntington Ingalls Industries 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 CEOs Directory module to screen CEOs from public companies around the world.