Correlation Between Airbus Group and International Business
Can any of the company-specific risk be diversified away by investing in both Airbus Group and International Business 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 Airbus Group and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Airbus Group SE and International Business Machines, you can compare the effects of market volatilities on Airbus Group and International Business 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 Airbus Group with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and International Business.
Diversification Opportunities for Airbus Group and International Business
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Airbus and International is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group SE and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and Airbus Group 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 Airbus Group SE are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Airbus Group i.e., Airbus Group and International Business go up and down completely randomly.
Pair Corralation between Airbus Group and International Business
Assuming the 90 days trading horizon Airbus Group is expected to generate 1.71 times less return on investment than International Business. But when comparing it to its historical volatility, Airbus Group SE is 1.03 times less risky than International Business. It trades about 0.09 of its potential returns per unit of risk. International Business Machines is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 11,984 in International Business Machines on January 19, 2024 and sell it today you would earn a total of 6,326 from holding International Business Machines or generate 52.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.42% |
| Values | Daily Returns |
Airbus Group SE vs. International Business Machine
Performance |
| Timeline |
| Airbus Group SE |
| International Business |
Airbus Group and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Airbus Group and International Business
The main advantage of trading using opposite Airbus Group and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.| Airbus Group vs. Mersen SA | Airbus Group vs. Trigano SA | Airbus Group vs. Chargeurs SA | Airbus Group vs. Eramet SA |
| International Business vs. Pfizer Inc | International Business vs. Home Federal Bancorp | International Business vs. Betterware De Mexico | International Business vs. Heartland Financial USA |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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