Correlation Between DHI and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both DHI 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 DHI and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHI Group and FTAI Aviation Ltd, you can compare the effects of market volatilities on DHI 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 DHI with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHI and FTAI Aviation.
Diversification Opportunities for DHI and FTAI Aviation
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between DHI and FTAI is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding DHI Group and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and DHI 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 DHI Group 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 DHI i.e., DHI and FTAI Aviation go up and down completely randomly.
Pair Corralation between DHI and FTAI Aviation
Considering the 90-day investment horizon DHI Group is expected to generate 3.43 times more return on investment than FTAI Aviation. However, DHI is 3.43 times more volatile than FTAI Aviation Ltd. It trades about 0.06 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.06 per unit of risk. If you would invest 160.00 in DHI Group on September 12, 2024 and sell it today you would earn a total of 13.00 from holding DHI Group or generate 8.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.44% |
| Values | Daily Returns |
DHI Group vs. FTAI Aviation Ltd
Performance |
| Timeline |
| DHI Group |
| FTAI Aviation |
DHI and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHI and FTAI Aviation
The main advantage of trading using opposite DHI and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHI 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 DHI Group 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.| FTAI Aviation vs. Empresa Distribuidora y | FTAI Aviation vs. United Utilities Group | FTAI Aviation vs. Treasury Wine Estates | FTAI Aviation vs. China Tontine Wines |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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