Correlation Between FTAI Aviation and Western Midstream
Can any of the company-specific risk be diversified away by investing in both FTAI Aviation and Western Midstream 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 Midstream 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 Midstream Partners, you can compare the effects of market volatilities on FTAI Aviation and Western Midstream 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 Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Aviation and Western Midstream.
Diversification Opportunities for FTAI Aviation and Western Midstream
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between FTAI and Western is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Western Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Midstream 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 Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Midstream has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Western Midstream go up and down completely randomly.
Pair Corralation between FTAI Aviation and Western Midstream
Assuming the 90 days horizon FTAI Aviation is expected to generate 1.91 times less return on investment than Western Midstream. But when comparing it to its historical volatility, FTAI Aviation Ltd is 1.22 times less risky than Western Midstream. It trades about 0.06 of its potential returns per unit of risk. Western Midstream Partners is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,213 in Western Midstream Partners on September 2, 2024 and sell it today you would earn a total of 1,858 from holding Western Midstream Partners or generate 83.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 88.1% |
| Values | Daily Returns |
FTAI Aviation Ltd vs. Western Midstream Partners
Performance |
| Timeline |
| FTAI Aviation |
| Western Midstream |
FTAI Aviation and Western Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FTAI Aviation and Western Midstream
The main advantage of trading using opposite FTAI Aviation and Western Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Aviation position performs unexpectedly, Western Midstream 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 Midstream will offset losses from the drop in Western Midstream's long position.| FTAI Aviation vs. SunOpta | FTAI Aviation vs. Grocery Outlet Holding | FTAI Aviation vs. SNDL Inc | FTAI Aviation vs. NH Foods Ltd |
| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy LP |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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