Correlation Between Lilium NV and Archer Aviation

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

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

Diversification Opportunities for Lilium NV and Archer Aviation

0.66

Correlation Coefficient

Lilium NV  Archer Aviation

Poor diversification

The 3 months correlation between Lilium and Archer is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Lilium NV 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 Lilium NV are associated (or correlated) with Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation has no effect on the direction of Lilium NV i.e., Lilium NV and Archer Aviation go up and down completely randomly.

Pair Corralation between Lilium NV and Archer Aviation

Given the investment horizon of 90 days Lilium NV is expected to under-perform the Archer Aviation. In addition to that, Lilium NV is 2.43 times more volatile than Archer Aviation. It trades about -0.04 of its total potential returns per unit of risk. Archer Aviation is currently generating about -0.05 per unit of volatility. If you would invest  1,006  in Archer Aviation on December 29, 2024 and sell it today you would lose (280.00) from holding Archer Aviation or give up 27.83% of portfolio value over 90 days.

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

Lilium NV  vs.  Archer Aviation

Lilium NV

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lilium NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Archer Aviation

Risk-Adjusted Performance

Very Weak

Over the last 90 days Archer Aviation has generated negative risk-adjusted returns adding no value to investors with long positions. Even with conflicting performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Lilium NV and Archer Aviation

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

The idea behind Lilium NV and Archer Aviation 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .