Correlation Between Triton International and FTAI Aviation

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

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

Diversification Opportunities for Triton International and FTAI Aviation

0.45

Correlation Coefficient

Triton International  FTAI Aviation

Very weak diversification

The 3 months correlation between Triton and FTAI is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Triton International Limited and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Triton International 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 Triton International Limited 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 Triton International i.e., Triton International and FTAI Aviation go up and down completely randomly.

Pair Corralation between Triton International and FTAI Aviation

Assuming the 90 days trading horizon Triton International Limited is expected to generate 0.19 times more return on investment than FTAI Aviation. However, Triton International Limited is 5.21 times less risky than FTAI Aviation. It trades about 0.24 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about -0.03 per unit of risk. If you would invest  2,490  in Triton International Limited on September 23, 2024 and sell it today you would earn a total of  30.00  from holding Triton International Limited or generate 1.2% return on investment over 90 days.

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

Triton International Limited  vs.  FTAI Aviation Ltd

Triton International

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Triton International Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental drivers, Triton International is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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 Triton International and FTAI Aviation

The main advantage of trading using opposite Triton International and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Triton International 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 Triton International Limited 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.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.