Correlation Between FTAI Aviation and SOUTHERN

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

Diversification Opportunities for FTAI Aviation and SOUTHERN

-0.05

Correlation Coefficient

FTAI Aviation  SOUTHERN

Good diversification

The 3 months correlation between FTAI and SOUTHERN is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and SOUTHERN PER CORP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOUTHERN PER P 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 SOUTHERN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOUTHERN PER P has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and SOUTHERN go up and down completely randomly.

Pair Corralation between FTAI Aviation and SOUTHERN

Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 3.08 times more return on investment than SOUTHERN. However, FTAI Aviation is 3.08 times more volatile than SOUTHERN PER CORP. It trades about 0.01 of its potential returns per unit of risk. SOUTHERN PER CORP is currently generating about -0.2 per unit of risk. If you would invest  2,660  in FTAI Aviation Ltd on September 24, 2024 and sell it today you would earn a total of  4.00  from holding FTAI Aviation Ltd or generate 0.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.71%
Values	Daily Returns

FTAI Aviation Ltd  vs.  SOUTHERN PER CORP

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.

SOUTHERN PER P

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SOUTHERN PER CORP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SOUTHERN is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FTAI Aviation and SOUTHERN

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

The idea behind FTAI Aviation Ltd and SOUTHERN PER 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.