Correlation Between FTAI Aviation and HE Equipment
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on FTAI Aviation and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and HE Equipment.
Diversification Opportunities for FTAI Aviation and HE Equipment
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FTAI and HEES is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and HE Equipment go up and down completely randomly.
Pair Corralation between FTAI Aviation and HE Equipment
Assuming the 90 days horizon FTAI Aviation is expected to generate 2.3 times less return on investment than HE Equipment. But when comparing it to its historical volatility, FTAI Aviation Ltd is 4.58 times less risky than HE Equipment. It trades about 0.11 of its potential returns per unit of risk. HE Equipment Services is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,256 in HE Equipment Services on August 24, 2024 and sell it today you would earn a total of 1,412 from holding HE Equipment Services or generate 33.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. HE Equipment Services
Performance |
| Timeline |
| FTAI Aviation |
| HE Equipment Services |
FTAI Aviation and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and HE Equipment
The main advantage of trading using opposite FTAI Aviation and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| FTAI Aviation vs. Braskem SA Class | FTAI Aviation vs. Analog Devices | FTAI Aviation vs. Sealed Air | FTAI Aviation vs. Western Digital |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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