Correlation Between CAE and Lilium Equity
Can any of the company-specific risk be diversified away by investing in both CAE and Lilium Equity 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 CAE and Lilium Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAE Inc and Lilium Equity Warrants, you can compare the effects of market volatilities on CAE and Lilium Equity 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 CAE with a short position of Lilium Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAE and Lilium Equity.
Diversification Opportunities for CAE and Lilium Equity
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CAE and Lilium is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding CAE Inc and Lilium Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium Equity Warrants and CAE 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 CAE Inc are associated (or correlated) with Lilium Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium Equity Warrants has no effect on the direction of CAE i.e., CAE and Lilium Equity go up and down completely randomly.
Pair Corralation between CAE and Lilium Equity
Considering the 90-day investment horizon CAE is expected to generate 9.92 times less return on investment than Lilium Equity. But when comparing it to its historical volatility, CAE Inc is 7.5 times less risky than Lilium Equity. It trades about 0.02 of its potential returns per unit of risk. Lilium Equity Warrants is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Lilium Equity Warrants on August 27, 2024 and sell it today you would lose (13.30) from holding Lilium Equity Warrants or give up 95.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 97.58% |
| Values | Daily Returns |
CAE Inc vs. Lilium Equity Warrants
Performance |
| Timeline |
| CAE Inc |
| Lilium Equity Warrants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
CAE and Lilium Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAE and Lilium Equity
The main advantage of trading using opposite CAE and Lilium Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAE position performs unexpectedly, Lilium Equity 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 Lilium Equity will offset losses from the drop in Lilium Equity's long position.The idea behind CAE Inc and Lilium Equity Warrants 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.| Lilium Equity vs. Joby Aviation | Lilium Equity vs. Lilium NV | Lilium Equity vs. AEye Inc | Lilium Equity vs. Microvast Holdings |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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