Correlation Between FTAI Aviation and Diageo PLC
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Diageo PLC 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 FTAI Aviation and Diageo PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FTAI Aviation Ltd and Diageo PLC ADR, you can compare the effects of market volatilities on FTAI Aviation and Diageo PLC 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 FTAI Aviation with a short position of Diageo PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Diageo PLC.
Diversification Opportunities for FTAI Aviation and Diageo PLC
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between FTAI and Diageo is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Diageo PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diageo PLC ADR and FTAI Aviation 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 FTAI Aviation Ltd are associated (or correlated) with Diageo PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diageo PLC ADR has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Diageo PLC go up and down completely randomly.
Pair Corralation between FTAI Aviation and Diageo PLC
Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.54 times more return on investment than Diageo PLC. However, FTAI Aviation Ltd is 1.85 times less risky than Diageo PLC. It trades about 0.16 of its potential returns per unit of risk. Diageo PLC ADR is currently generating about -0.08 per unit of risk. If you would invest 2,574 in FTAI Aviation Ltd on September 2, 2024 and sell it today you would earn a total of 214.00 from holding FTAI Aviation Ltd or generate 8.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. Diageo PLC ADR
Performance |
| Timeline |
| FTAI Aviation |
| Diageo PLC ADR |
FTAI Aviation and Diageo PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Diageo PLC
The main advantage of trading using opposite FTAI Aviation and Diageo PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Diageo PLC 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 Diageo PLC will offset losses from the drop in Diageo PLC's long position.| FTAI Aviation vs. SunOpta | FTAI Aviation vs. Grocery Outlet Holding | FTAI Aviation vs. SNDL Inc | FTAI Aviation vs. NH Foods Ltd |
| Diageo PLC vs. Brown Forman | Diageo PLC vs. Duckhorn Portfolio | Diageo PLC vs. Brown Forman | Diageo PLC vs. Constellation Brands Class |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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