Correlation Between Lilium NV and Virgin Galactic

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

By analyzing existing cross correlation between Lilium NV and Virgin Galactic Holdings, you can compare the effects of market volatilities on Lilium NV and Virgin Galactic 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 Virgin Galactic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium NV and Virgin Galactic.

Diversification Opportunities for Lilium NV and Virgin Galactic

0.88

Correlation Coefficient

Lilium NV  Virgin Galactic

Very poor diversification

The 3 months correlation between Lilium and Virgin is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Virgin Galactic Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Galactic Holdings 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 Virgin Galactic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Galactic Holdings has no effect on the direction of Lilium NV i.e., Lilium NV and Virgin Galactic go up and down completely randomly.

Pair Corralation between Lilium NV and Virgin Galactic

Given the investment horizon of 90 days Lilium NV is expected to generate 3.53 times more return on investment than Virgin Galactic. However, Lilium NV is 3.53 times more volatile than Virgin Galactic Holdings. It trades about -0.03 of its potential returns per unit of risk. Virgin Galactic Holdings is currently generating about -0.14 per unit of risk. If you would invest  22.00  in Lilium NV on December 26, 2024 and sell it today you would lose (15.01) from holding Lilium NV or give up 68.23% of portfolio value over 90 days.

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

Lilium NV  vs.  Virgin Galactic Holdings

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.

Virgin Galactic Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Virgin Galactic Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Lilium NV and Virgin Galactic

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

The idea behind Lilium NV and Virgin Galactic Holdings 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.