Correlation Between FTAI Aviation and Lakeland Industries

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

Diversification Opportunities for FTAI Aviation and Lakeland Industries

0.57

Correlation Coefficient

FTAI Aviation  Lakeland Industries

Very weak diversification

The 3 months correlation between FTAI and Lakeland is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Lakeland Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lakeland Industries 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 Lakeland Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lakeland Industries has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Lakeland Industries go up and down completely randomly.

Pair Corralation between FTAI Aviation and Lakeland Industries

Assuming the 90 days horizon FTAI Aviation is expected to generate 7.25 times less return on investment than Lakeland Industries. But when comparing it to its historical volatility, FTAI Aviation Ltd is 2.48 times less risky than Lakeland Industries. It trades about 0.07 of its potential returns per unit of risk. Lakeland Industries is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,922  in Lakeland Industries on October 4, 2024 and sell it today you would earn a total of  633.00  from holding Lakeland Industries or generate 32.93% return on investment over 90 days.

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

FTAI Aviation Ltd  vs.  Lakeland Industries

FTAI Aviation

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 5 (%) 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 latest stock price disarray, may contribute to short-term losses for the investors.

Lakeland Industries

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lakeland Industries are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Lakeland Industries exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTAI Aviation and Lakeland Industries

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

The idea behind FTAI Aviation Ltd and Lakeland Industries 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.