Correlation Between FTAI Aviation and Nextera Energy
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Nextera Energy 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 Nextera Energy 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 Nextera Energy, you can compare the effects of market volatilities on FTAI Aviation and Nextera Energy 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 Nextera Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Nextera Energy.
Diversification Opportunities for FTAI Aviation and Nextera Energy
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between FTAI and Nextera is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Nextera Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextera Energy 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 Nextera Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextera Energy has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Nextera Energy go up and down completely randomly.
Pair Corralation between FTAI Aviation and Nextera Energy
Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.53 times more return on investment than Nextera Energy. However, FTAI Aviation Ltd is 1.9 times less risky than Nextera Energy. It trades about 0.03 of its potential returns per unit of risk. Nextera Energy is currently generating about -0.17 per unit of risk. If you would invest 2,703 in FTAI Aviation Ltd on August 28, 2024 and sell it today you would earn a total of 15.00 from holding FTAI Aviation Ltd or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. Nextera Energy
Performance |
| Timeline |
| FTAI Aviation |
| Nextera Energy |
FTAI Aviation and Nextera Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Nextera Energy
The main advantage of trading using opposite FTAI Aviation and Nextera Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Nextera Energy 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 Nextera Energy will offset losses from the drop in Nextera Energy's long position.| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
| Nextera Energy vs. Dominion Energy | Nextera Energy vs. Consolidated Edison | Nextera Energy vs. Eversource Energy | Nextera Energy vs. FirstEnergy |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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