Correlation Between FTAI Aviation and 00774MAX3

Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and 00774MAX3 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 00774MAX3 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 AER 33 30 JAN 32, you can compare the effects of market volatilities on FTAI Aviation and 00774MAX3 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 00774MAX3. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and 00774MAX3.

Diversification Opportunities for FTAI Aviation and 00774MAX3

-0.24

Correlation Coefficient

FTAI Aviation  00774MAX3

Very good diversification

The 3 months correlation between FTAI and 00774MAX3 is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and AER 33 30 JAN 32 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AER 33 30 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 00774MAX3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AER 33 30 has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and 00774MAX3 go up and down completely randomly.

Pair Corralation between FTAI Aviation and 00774MAX3

Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 2.02 times more return on investment than 00774MAX3. However, FTAI Aviation is 2.02 times more volatile than AER 33 30 JAN 32. It trades about 0.0 of its potential returns per unit of risk. AER 33 30 JAN 32 is currently generating about -0.07 per unit of risk. If you would invest  2,591  in FTAI Aviation Ltd on December 24, 2024 and sell it today you would lose (3.00) from holding FTAI Aviation Ltd or give up 0.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

FTAI Aviation Ltd  vs.  AER 33 30 JAN 32

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 recent stock price disarray, may contribute to short-term losses for the investors.

AER 33 30

Risk-Adjusted Performance

Very Weak

Over the last 90 days AER 33 30 JAN 32 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00774MAX3 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FTAI Aviation and 00774MAX3

The main advantage of trading using opposite FTAI Aviation and 00774MAX3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, 00774MAX3 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 00774MAX3 will offset losses from the drop in 00774MAX3's long position.

The idea behind FTAI Aviation Ltd and AER 33 30 JAN 32 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.