Correlation Between FTAI Aviation and Waters
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Waters 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 Waters 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 Waters, you can compare the effects of market volatilities on FTAI Aviation and Waters 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 Waters. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Waters.
Diversification Opportunities for FTAI Aviation and Waters
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FTAI and Waters is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Waters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waters 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 Waters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waters has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Waters go up and down completely randomly.
Pair Corralation between FTAI Aviation and Waters
Assuming the 90 days horizon FTAI Aviation is expected to generate 1.59 times less return on investment than Waters. But when comparing it to its historical volatility, FTAI Aviation Ltd is 2.61 times less risky than Waters. It trades about 0.1 of its potential returns per unit of risk. Waters is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 26,327 in Waters on September 12, 2024 and sell it today you would earn a total of 12,708 from holding Waters or generate 48.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. Waters
Performance |
| Timeline |
| FTAI Aviation |
| Waters |
FTAI Aviation and Waters Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Waters
The main advantage of trading using opposite FTAI Aviation and Waters positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Waters 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 Waters will offset losses from the drop in Waters' long position.| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
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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