Correlation Between Passat Socit and Airbus Group

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

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

Diversification Opportunities for Passat Socit and Airbus Group

-0.24

Correlation Coefficient

Passat Socit  Airbus Group

Very good diversification

The 3 months correlation between Passat and Airbus is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Passat Socit Anonyme 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 Passat Socit 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 Passat Socit Anonyme 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 Passat Socit i.e., Passat Socit and Airbus Group go up and down completely randomly.

Pair Corralation between Passat Socit and Airbus Group

Assuming the 90 days trading horizon Passat Socit is expected to generate 5.99 times less return on investment than Airbus Group. In addition to that, Passat Socit is 1.55 times more volatile than Airbus Group SE. It trades about 0.01 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  12,414  in Airbus Group SE on October 5, 2024 and sell it today you would earn a total of  3,444  from holding Airbus Group SE or generate 27.74% return on investment over 90 days.

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

Passat Socit Anonyme  vs.  Airbus Group SE

Passat Socit Anonyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Passat Socit Anonyme has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Passat Socit is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Airbus Group SE

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group SE are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Airbus Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Passat Socit and Airbus Group

The main advantage of trading using opposite Passat Socit and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passat Socit 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 Passat Socit Anonyme 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.