Correlation Between International Consolidated and Airbus Group

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

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

Diversification Opportunities for International Consolidated and Airbus Group

0.91

Correlation Coefficient

International Consolidated  Airbus Group

Almost no diversification

The 3 months correlation between International and Airbus is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air 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 International Consolidated 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 International Consolidated Airlines 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 International Consolidated i.e., International Consolidated and Airbus Group go up and down completely randomly.

Pair Corralation between International Consolidated and Airbus Group

Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 0.89 times more return on investment than Airbus Group. However, International Consolidated Airlines is 1.12 times less risky than Airbus Group. It trades about 0.25 of its potential returns per unit of risk. Airbus Group SE is currently generating about 0.05 per unit of risk. If you would invest  340.00  in International Consolidated Airlines on October 9, 2024 and sell it today you would earn a total of  17.00  from holding International Consolidated Airlines or generate 5.0% return on investment over 90 days.

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

International Consolidated Air  vs.  Airbus Group SE

International Consolidated

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, International Consolidated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Airbus Group SE

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Airbus Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with International Consolidated and Airbus Group

The main advantage of trading using opposite International Consolidated and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated 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 International Consolidated Airlines 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.