Correlation Between Custom Truck and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Custom Truck 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 Custom Truck and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and FTAI Aviation Ltd, you can compare the effects of market volatilities on Custom Truck 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 Custom Truck with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and FTAI Aviation.
Diversification Opportunities for Custom Truck and FTAI Aviation
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Custom and FTAI is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and FTAI Aviation go up and down completely randomly.
Pair Corralation between Custom Truck and FTAI Aviation
Given the investment horizon of 90 days Custom Truck is expected to generate 2.7 times less return on investment than FTAI Aviation. In addition to that, Custom Truck is 5.57 times more volatile than FTAI Aviation Ltd. It trades about 0.01 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.11 per unit of volatility. If you would invest 2,297 in FTAI Aviation Ltd on August 24, 2024 and sell it today you would earn a total of 401.00 from holding FTAI Aviation Ltd or generate 17.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Custom Truck One vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Custom Truck One |
| FTAI Aviation |
Custom Truck and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and FTAI Aviation
The main advantage of trading using opposite Custom Truck and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
| FTAI Aviation vs. Braskem SA Class | FTAI Aviation vs. Analog Devices | FTAI Aviation vs. Sealed Air | FTAI Aviation vs. Western Digital |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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