Correlation Between Airbus Group and Lilium Equity

Can any of the company-specific risk be diversified away by investing in both Airbus Group and Lilium Equity 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 Lilium Equity 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 Lilium Equity Warrants, you can compare the effects of market volatilities on Airbus Group and Lilium Equity 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 Lilium Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Airbus Group and Lilium Equity.

Diversification Opportunities for Airbus Group and Lilium Equity

0.03

Correlation Coefficient

Airbus Group  Lilium Equity

Significant diversification

The 3 months correlation between Airbus and Lilium is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Airbus Group NV and Lilium Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium Equity Warrants 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 Lilium Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium Equity Warrants has no effect on the direction of Airbus Group i.e., Airbus Group and Lilium Equity go up and down completely randomly.

Pair Corralation between Airbus Group and Lilium Equity

Assuming the 90 days horizon Airbus Group NV is expected to generate 0.09 times more return on investment than Lilium Equity. However, Airbus Group NV is 10.63 times less risky than Lilium Equity. It trades about 0.07 of its potential returns per unit of risk. Lilium Equity Warrants is currently generating about -0.13 per unit of risk. If you would invest  3,692  in Airbus Group NV on September 4, 2024 and sell it today you would earn a total of  260.00  from holding Airbus Group NV or generate 7.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.44%
Values	Daily Returns

Airbus Group NV  vs.  Lilium Equity Warrants

Airbus Group NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Airbus Group NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Airbus Group may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Lilium Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lilium Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Airbus Group and Lilium Equity

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

The idea behind Airbus Group NV and Lilium Equity Warrants 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.