Correlation Between Lilium NV and Hexcel
Can any of the company-specific risk be diversified away by investing in both Lilium NV and Hexcel 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 Hexcel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lilium NV and Hexcel, you can compare the effects of market volatilities on Lilium NV and Hexcel 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 Hexcel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium NV and Hexcel.
Diversification Opportunities for Lilium NV and Hexcel
Poor diversification
The 3 months correlation between Lilium and Hexcel is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Hexcel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexcel 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 Hexcel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexcel has no effect on the direction of Lilium NV i.e., Lilium NV and Hexcel go up and down completely randomly.
Pair Corralation between Lilium NV and Hexcel
Given the investment horizon of 90 days Lilium NV is expected to under-perform the Hexcel. In addition to that, Lilium NV is 8.66 times more volatile than Hexcel. It trades about -0.04 of its total potential returns per unit of risk. Hexcel is currently generating about -0.06 per unit of volatility. If you would invest 6,243 in Hexcel on December 28, 2024 and sell it today you would lose (433.00) from holding Hexcel or give up 6.94% 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. Hexcel
Performance |
Timeline |
Lilium NV |
Hexcel |
Lilium NV and Hexcel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Lilium NV and Hexcel
The main advantage of trading using opposite Lilium NV and Hexcel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium NV position performs unexpectedly, Hexcel 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 Hexcel will offset losses from the drop in Hexcel's long position.Lilium NV vs. Vertical Aerospace | Lilium NV vs. Ehang Holdings | Lilium NV vs. Rocket Lab USA | Lilium NV vs. Archer Aviation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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