Correlation Between FTAI Aviation and Eupraxia Pharmaceuticals

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

Diversification Opportunities for FTAI Aviation and Eupraxia Pharmaceuticals

0.39

Correlation Coefficient

FTAI Aviation  Eupraxia Pharmaceuticals

Weak diversification

The 3 months correlation between FTAI and Eupraxia is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Eupraxia Pharmaceuticals Commo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eupraxia Pharmaceuticals 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 Eupraxia Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eupraxia Pharmaceuticals has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Eupraxia Pharmaceuticals go up and down completely randomly.

Pair Corralation between FTAI Aviation and Eupraxia Pharmaceuticals

Assuming the 90 days horizon FTAI Aviation is expected to generate 1162.75 times less return on investment than Eupraxia Pharmaceuticals. But when comparing it to its historical volatility, FTAI Aviation Ltd is 4.27 times less risky than Eupraxia Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Eupraxia Pharmaceuticals Common is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  309.00  in Eupraxia Pharmaceuticals Common on December 21, 2024 and sell it today you would earn a total of  82.00  from holding Eupraxia Pharmaceuticals Common or generate 26.54% 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.  Eupraxia Pharmaceuticals Commo

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.

Eupraxia Pharmaceuticals

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eupraxia Pharmaceuticals Common are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Eupraxia Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTAI Aviation and Eupraxia Pharmaceuticals

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

The idea behind FTAI Aviation Ltd and Eupraxia Pharmaceuticals Common 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.