Correlation Between FTAI Aviation and NetEase
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and NetEase 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 NetEase 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 NetEase, you can compare the effects of market volatilities on FTAI Aviation and NetEase 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 NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and NetEase.
Diversification Opportunities for FTAI Aviation and NetEase
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FTAI and NetEase is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase 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 NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and NetEase go up and down completely randomly.
Pair Corralation between FTAI Aviation and NetEase
Assuming the 90 days horizon FTAI Aviation is expected to generate 1.79 times less return on investment than NetEase. But when comparing it to its historical volatility, FTAI Aviation Ltd is 3.73 times less risky than NetEase. It trades about 0.16 of its potential returns per unit of risk. NetEase is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,757 in NetEase on September 2, 2024 and sell it today you would earn a total of 991.00 from holding NetEase or generate 12.78% 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. NetEase
Performance |
| Timeline |
| FTAI Aviation |
| NetEase |
FTAI Aviation and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and NetEase
The main advantage of trading using opposite FTAI Aviation and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.| FTAI Aviation vs. SunOpta | FTAI Aviation vs. Grocery Outlet Holding | FTAI Aviation vs. SNDL Inc | FTAI Aviation vs. NH Foods Ltd |
| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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