Correlation Between FTAI Aviation and Denison Mines

Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Denison Mines 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 Denison Mines 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 Denison Mines Corp, you can compare the effects of market volatilities on FTAI Aviation and Denison Mines 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 Denison Mines. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Denison Mines.

Diversification Opportunities for FTAI Aviation and Denison Mines

0.38

Correlation Coefficient

FTAI Aviation  Denison Mines

Weak diversification

The 3 months correlation between FTAI and Denison is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Denison Mines Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denison Mines Corp 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 Denison Mines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denison Mines Corp has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Denison Mines go up and down completely randomly.

Pair Corralation between FTAI Aviation and Denison Mines

Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.24 times more return on investment than Denison Mines. However, FTAI Aviation Ltd is 4.23 times less risky than Denison Mines. It trades about 0.14 of its potential returns per unit of risk. Denison Mines Corp is currently generating about -0.12 per unit of risk. If you would invest  2,631  in FTAI Aviation Ltd on October 11, 2024 and sell it today you would earn a total of  74.00  from holding FTAI Aviation Ltd or generate 2.81% return on investment over 90 days.

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

FTAI Aviation Ltd  vs.  Denison Mines Corp

FTAI Aviation

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Denison Mines Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Denison Mines Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Denison Mines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with FTAI Aviation and Denison Mines

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

The idea behind FTAI Aviation Ltd and Denison Mines Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.