Correlation Between FTAI Aviation and Custom Truck

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

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

Diversification Opportunities for FTAI Aviation and Custom Truck

-0.52

Correlation Coefficient

FTAI Aviation  Custom Truck

Excellent diversification

The 3 months correlation between FTAI and Custom is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Custom Truck One in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Custom Truck One and FTAI Aviation 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 FTAI Aviation Ltd are associated (or correlated) with Custom Truck. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Custom Truck One has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Custom Truck go up and down completely randomly.

Pair Corralation between FTAI Aviation and Custom Truck

Assuming the 90 days horizon FTAI Aviation Ltd is expected to under-perform the Custom Truck. But the preferred stock apears to be less risky and, when comparing its historical volatility, FTAI Aviation Ltd is 5.01 times less risky than Custom Truck. The preferred stock trades about 0.0 of its potential returns per unit of risk. The Custom Truck One is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  481.00  in Custom Truck One on December 28, 2024 and sell it today you would lose (16.00) from holding Custom Truck One or give up 3.33% of portfolio value over 90 days.

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

FTAI Aviation Ltd  vs.  Custom Truck One

FTAI Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days FTAI Aviation Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Custom Truck One

Risk-Adjusted Performance

Very Weak

Over the last 90 days Custom Truck One has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Custom Truck is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with FTAI Aviation and Custom Truck

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

The idea behind FTAI Aviation Ltd and Custom Truck One 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.