Correlation Between FTAI Aviation and Nasdaq
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Nasdaq 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 Nasdaq 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 Nasdaq Inc, you can compare the effects of market volatilities on FTAI Aviation and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Nasdaq.
Diversification Opportunities for FTAI Aviation and Nasdaq
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FTAI and Nasdaq is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Nasdaq go up and down completely randomly.
Pair Corralation between FTAI Aviation and Nasdaq
Assuming the 90 days horizon FTAI Aviation is expected to generate 2.74 times less return on investment than Nasdaq. But when comparing it to its historical volatility, FTAI Aviation Ltd is 1.71 times less risky than Nasdaq. It trades about 0.15 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 5,860 in Nasdaq Inc on August 29, 2024 and sell it today you would earn a total of 2,445 from holding Nasdaq Inc or generate 41.72% 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. Nasdaq Inc
Performance |
| Timeline |
| FTAI Aviation |
| Nasdaq Inc |
FTAI Aviation and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Nasdaq
The main advantage of trading using opposite FTAI Aviation and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| FTAI Aviation vs. Volaris | FTAI Aviation vs. Playa Hotels Resorts | FTAI Aviation vs. American Airlines Group | FTAI Aviation vs. Playtika Holding Corp |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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