Correlation Between Triumph and Airbus Group

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

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

Diversification Opportunities for Triumph and Airbus Group

0.16

Correlation Coefficient

Triumph  Airbus Group

Average diversification

The 3 months correlation between Triumph and Airbus is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Airbus Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airbus Group NV and Triumph 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 Triumph Group 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 NV has no effect on the direction of Triumph i.e., Triumph and Airbus Group go up and down completely randomly.

Pair Corralation between Triumph and Airbus Group

Considering the 90-day investment horizon Triumph Group is expected to generate 2.4 times more return on investment than Airbus Group. However, Triumph is 2.4 times more volatile than Airbus Group NV. It trades about 0.15 of its potential returns per unit of risk. Airbus Group NV is currently generating about 0.06 per unit of risk. If you would invest  1,356  in Triumph Group on September 3, 2024 and sell it today you would earn a total of  569.00  from holding Triumph Group or generate 41.96% return on investment over 90 days.

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

Triumph Group  vs.  Airbus Group NV

Triumph Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Airbus Group NV

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Airbus Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Triumph and Airbus Group

The main advantage of trading using opposite Triumph and Airbus Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triumph 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 Triumph Group and Airbus Group NV 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..