Correlation Between Gap, and FTAI Aviation

Can any of the company-specific risk be diversified away by investing in both Gap, and FTAI Aviation 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 Gap, and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between The Gap, and FTAI Aviation Ltd, you can compare the effects of market volatilities on Gap, and FTAI Aviation 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 Gap, with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and FTAI Aviation.

Diversification Opportunities for Gap, and FTAI Aviation

0.69

Correlation Coefficient

Gap,  FTAI Aviation

Poor diversification

The 3 months correlation between Gap, and FTAI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Gap, 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 The Gap, are associated (or correlated) with FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Gap, i.e., Gap, and FTAI Aviation go up and down completely randomly.

Pair Corralation between Gap, and FTAI Aviation

Considering the 90-day investment horizon The Gap, is expected to under-perform the FTAI Aviation. In addition to that, Gap, is 1.77 times more volatile than FTAI Aviation Ltd. It trades about -0.22 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about -0.03 per unit of volatility. If you would invest  2,700  in FTAI Aviation Ltd on October 4, 2024 and sell it today you would lose (20.00) from holding FTAI Aviation Ltd or give up 0.74% of portfolio value over 90 days.

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

The Gap,  vs.  FTAI Aviation Ltd

Gap,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Gap, and FTAI Aviation

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

The idea behind The Gap, and FTAI Aviation Ltd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.