Correlation Between Kenon Holdings and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Kenon Holdings 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 Kenon Holdings and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenon Holdings and FTAI Aviation Ltd, you can compare the effects of market volatilities on Kenon Holdings 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 Kenon Holdings with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenon Holdings and FTAI Aviation.
Diversification Opportunities for Kenon Holdings and FTAI Aviation
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kenon and FTAI is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Kenon Holdings and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Kenon Holdings 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 Kenon Holdings 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 Kenon Holdings i.e., Kenon Holdings and FTAI Aviation go up and down completely randomly.
Pair Corralation between Kenon Holdings and FTAI Aviation
Considering the 90-day investment horizon Kenon Holdings is expected to generate 1.02 times less return on investment than FTAI Aviation. In addition to that, Kenon Holdings is 1.69 times more volatile than FTAI Aviation Ltd. It trades about 0.03 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.05 per unit of volatility. If you would invest 2,076 in FTAI Aviation Ltd on September 12, 2024 and sell it today you would earn a total of 555.00 from holding FTAI Aviation Ltd or generate 26.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 89.49% |
| Values | Daily Returns |
Kenon Holdings vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Kenon Holdings |
| FTAI Aviation |
Kenon Holdings and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenon Holdings and FTAI Aviation
The main advantage of trading using opposite Kenon Holdings and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenon Holdings 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.| Kenon Holdings vs. Vistra Energy Corp | Kenon Holdings vs. Pampa Energia SA | Kenon Holdings vs. NRG Energy | Kenon Holdings vs. TransAlta Corp |
| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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