Correlation Between FTAI Aviation and DHI
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and DHI 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 DHI 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 DHI Group, you can compare the effects of market volatilities on FTAI Aviation and DHI 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 DHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and DHI.
Diversification Opportunities for FTAI Aviation and DHI
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between FTAI and DHI is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and DHI Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHI Group 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 DHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHI Group has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and DHI go up and down completely randomly.
Pair Corralation between FTAI Aviation and DHI
Assuming the 90 days horizon FTAI Aviation is expected to generate 1.8 times less return on investment than DHI. But when comparing it to its historical volatility, FTAI Aviation Ltd is 3.28 times less risky than DHI. It trades about 0.1 of its potential returns per unit of risk. DHI Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 165.00 in DHI Group on September 5, 2024 and sell it today you would earn a total of 9.00 from holding DHI Group or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. DHI Group
Performance |
| Timeline |
| FTAI Aviation |
| DHI Group |
FTAI Aviation and DHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and DHI
The main advantage of trading using opposite FTAI Aviation and DHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, DHI 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 DHI will offset losses from the drop in DHI's long position.| 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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