Correlation Between Genpact and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Genpact and FTAI Aviation 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 Genpact and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genpact Limited and FTAI Aviation Ltd, you can compare the effects of market volatilities on Genpact and FTAI Aviation 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 Genpact with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genpact and FTAI Aviation.
Diversification Opportunities for Genpact and FTAI Aviation
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Genpact and FTAI is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Genpact Limited and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Genpact 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 Genpact Limited are associated (or correlated) with FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Genpact i.e., Genpact and FTAI Aviation go up and down completely randomly.
Pair Corralation between Genpact and FTAI Aviation
Taking into account the 90-day investment horizon Genpact is expected to generate 2.62 times less return on investment than FTAI Aviation. In addition to that, Genpact is 1.3 times more volatile than FTAI Aviation Ltd. It trades about 0.02 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.06 per unit of volatility. If you would invest 2,121 in FTAI Aviation Ltd on August 30, 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 | 87.88% |
| Values | Daily Returns |
Genpact Limited vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Genpact Limited |
| FTAI Aviation |
Genpact and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Genpact and FTAI Aviation
The main advantage of trading using opposite Genpact and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genpact position performs unexpectedly, FTAI Aviation 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.| Genpact vs. WNS Holdings | Genpact vs. ASGN Inc | Genpact vs. CACI International | Genpact vs. ExlService Holdings |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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