Correlation Between Vertical Aerospace and Lilium NV

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

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

Diversification Opportunities for Vertical Aerospace and Lilium NV

0.75

Correlation Coefficient

Vertical Aerospace  Lilium NV

Poor diversification

The 3 months correlation between Vertical and Lilium is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vertical Aerospace and Lilium NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium NV and Vertical Aerospace 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 Vertical Aerospace are associated (or correlated) with Lilium NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium NV has no effect on the direction of Vertical Aerospace i.e., Vertical Aerospace and Lilium NV go up and down completely randomly.

Pair Corralation between Vertical Aerospace and Lilium NV

Given the investment horizon of 90 days Vertical Aerospace is expected to under-perform the Lilium NV. But the stock apears to be less risky and, when comparing its historical volatility, Vertical Aerospace is 1.81 times less risky than Lilium NV. The stock trades about -0.2 of its potential returns per unit of risk. The Lilium NV is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  18.00  in Lilium NV on December 29, 2024 and sell it today you would lose (12.05) from holding Lilium NV or give up 66.94% of portfolio value over 90 days.

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

Vertical Aerospace  vs.  Lilium NV

Vertical Aerospace

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vertical Aerospace has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Lilium NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lilium NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vertical Aerospace and Lilium NV

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

The idea behind Vertical Aerospace and Lilium 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.