Correlation Between Canadian Pacific and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific 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 Canadian Pacific and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and FTAI Aviation Ltd, you can compare the effects of market volatilities on Canadian Pacific 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 Canadian Pacific with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and FTAI Aviation.
Diversification Opportunities for Canadian Pacific and FTAI Aviation
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Canadian and FTAI is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Canadian Pacific 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 Canadian Pacific Railway 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 Canadian Pacific i.e., Canadian Pacific and FTAI Aviation go up and down completely randomly.
Pair Corralation between Canadian Pacific and FTAI Aviation
Allowing for the 90-day total investment horizon Canadian Pacific Railway is expected to under-perform the FTAI Aviation. In addition to that, Canadian Pacific is 1.21 times more volatile than FTAI Aviation Ltd. It trades about -0.02 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.12 per unit of volatility. If you would invest 2,684 in FTAI Aviation Ltd on August 26, 2024 and sell it today you would earn a total of 66.00 from holding FTAI Aviation Ltd or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Canadian Pacific Railway |
| FTAI Aviation |
Canadian Pacific and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and FTAI Aviation
The main advantage of trading using opposite Canadian Pacific and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific 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.| Canadian Pacific vs. Union Pacific | Canadian Pacific vs. CSX Corporation | Canadian Pacific vs. Norfolk Southern | Canadian Pacific vs. Westinghouse Air Brake |
| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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