Correlation Between FTAI Aviation and Western Acquisition
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on FTAI Aviation and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Western Acquisition.
Diversification Opportunities for FTAI Aviation and Western Acquisition
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FTAI and Western is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Western Acquisition go up and down completely randomly.
Pair Corralation between FTAI Aviation and Western Acquisition
Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.74 times more return on investment than Western Acquisition. However, FTAI Aviation Ltd is 1.35 times less risky than Western Acquisition. It trades about 0.06 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.02 per unit of risk. If you would invest 2,121 in FTAI Aviation Ltd on August 29, 2024 and sell it today you would earn a total of 667.00 from holding FTAI Aviation Ltd or generate 31.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 87.7% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. Western Acquisition Ventures
Performance |
| Timeline |
| FTAI Aviation |
| Western Acquisition |
FTAI Aviation and Western Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Western Acquisition
The main advantage of trading using opposite FTAI Aviation and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition'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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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