Correlation Between Embraer SA and Lilium Equity
Can any of the company-specific risk be diversified away by investing in both Embraer SA 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 Embraer SA and Lilium Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embraer SA ADR and Lilium Equity Warrants, you can compare the effects of market volatilities on Embraer SA 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 Embraer SA with a short position of Lilium Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embraer SA and Lilium Equity.
Diversification Opportunities for Embraer SA and Lilium Equity
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Embraer and Lilium is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Embraer SA ADR 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 Embraer SA 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 Embraer SA ADR 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 Embraer SA i.e., Embraer SA and Lilium Equity go up and down completely randomly.
Pair Corralation between Embraer SA and Lilium Equity
Considering the 90-day investment horizon Embraer SA ADR is expected to generate 0.11 times more return on investment than Lilium Equity. However, Embraer SA ADR is 8.98 times less risky than Lilium Equity. It trades about 0.12 of its potential returns per unit of risk. Lilium Equity Warrants is currently generating about -0.21 per unit of risk. If you would invest 3,572 in Embraer SA ADR on August 28, 2024 and sell it today you would earn a total of 428.00 from holding Embraer SA ADR or generate 11.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 69.77% |
| Values | Daily Returns |
Embraer SA ADR vs. Lilium Equity Warrants
Performance |
| Timeline |
| Embraer SA ADR |
| Lilium Equity Warrants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Embraer SA and Lilium Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Embraer SA and Lilium Equity
The main advantage of trading using opposite Embraer SA and Lilium Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embraer SA 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.| Embraer SA vs. Sidus Space | Embraer SA vs. Rocket Lab USA | Embraer SA vs. Momentus | Embraer SA vs. Planet Labs PBC |
| 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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