Correlation Between Broadstone Net and FTAI Aviation

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

By analyzing existing cross correlation between Broadstone Net Lease and FTAI Aviation Ltd, you can compare the effects of market volatilities on Broadstone Net and FTAI Aviation 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 Broadstone Net with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Broadstone Net and FTAI Aviation.

Diversification Opportunities for Broadstone Net and FTAI Aviation

-0.72

Correlation Coefficient

Broadstone Net  FTAI Aviation

Pay attention - limited upside

The 3 months correlation between Broadstone and FTAI is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Broadstone Net Lease and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Broadstone Net 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 Broadstone Net Lease are associated (or correlated) with FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Broadstone Net i.e., Broadstone Net and FTAI Aviation go up and down completely randomly.

Pair Corralation between Broadstone Net and FTAI Aviation

Considering the 90-day investment horizon Broadstone Net Lease is expected to under-perform the FTAI Aviation. In addition to that, Broadstone Net is 1.22 times more volatile than FTAI Aviation Ltd. It trades about -0.05 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.16 per unit of volatility. If you would invest  2,574  in FTAI Aviation Ltd on September 2, 2024 and sell it today you would earn a total of  214.00  from holding FTAI Aviation Ltd or generate 8.31% return on investment over 90 days.

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

Broadstone Net Lease  vs.  FTAI Aviation Ltd

Broadstone Net Lease

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Broadstone Net Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Broadstone Net is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

FTAI Aviation

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, FTAI Aviation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Broadstone Net and FTAI Aviation

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

The idea behind Broadstone Net Lease and FTAI Aviation Ltd 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.

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 Transaction History module to view history of all your transactions and understand their impact on performance.