Correlation Between Airbus Group and Ducommun Incorporated

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

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

Diversification Opportunities for Airbus Group and Ducommun Incorporated

-0.1

Correlation Coefficient

Airbus Group  Ducommun Incorporated

Good diversification

The 3 months correlation between Airbus and Ducommun is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group NV and Ducommun Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducommun Incorporated 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 NV are associated (or correlated) with Ducommun Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducommun Incorporated has no effect on the direction of Airbus Group i.e., Airbus Group and Ducommun Incorporated go up and down completely randomly.

Pair Corralation between Airbus Group and Ducommun Incorporated

Assuming the 90 days horizon Airbus Group is expected to generate 1.1 times less return on investment than Ducommun Incorporated. In addition to that, Airbus Group is 1.0 times more volatile than Ducommun Incorporated. It trades about 0.06 of its total potential returns per unit of risk. Ducommun Incorporated is currently generating about 0.06 per unit of volatility. If you would invest  6,315  in Ducommun Incorporated on September 3, 2024 and sell it today you would earn a total of  385.00  from holding Ducommun Incorporated or generate 6.1% return on investment over 90 days.

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

Airbus Group NV  vs.  Ducommun Incorporated

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.

Ducommun Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ducommun Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Ducommun Incorporated may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Airbus Group and Ducommun Incorporated

The main advantage of trading using opposite Airbus Group and Ducommun Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Airbus Group position performs unexpectedly, Ducommun Incorporated 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 Ducommun Incorporated will offset losses from the drop in Ducommun Incorporated's long position.

The idea behind Airbus Group NV and Ducommun Incorporated 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.