Correlation Between Lilium NV and Archer Aviation
Can any of the company-specific risk be diversified away by investing in both Lilium NV and Archer 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 Lilium NV and Archer Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lilium NV and Archer Aviation, you can compare the effects of market volatilities on Lilium NV and Archer 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 Lilium NV with a short position of Archer Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium NV and Archer Aviation.
Diversification Opportunities for Lilium NV and Archer Aviation
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Lilium and Archer is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Archer Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Aviation and Lilium NV 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 Lilium NV are associated (or correlated) with Archer Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Aviation has no effect on the direction of Lilium NV i.e., Lilium NV and Archer Aviation go up and down completely randomly.
Pair Corralation between Lilium NV and Archer Aviation
Given the investment horizon of 90 days Lilium NV is expected to generate 4.65 times more return on investment than Archer Aviation. However, Lilium NV is 4.65 times more volatile than Archer Aviation. It trades about 0.06 of its potential returns per unit of risk. Archer Aviation is currently generating about 0.17 per unit of risk. If you would invest 68.00 in Lilium NV on November 2, 2024 and sell it today you would lose (51.00) from holding Lilium NV or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lilium NV vs. Archer Aviation
Performance |
| Timeline |
| Lilium NV |
| Archer Aviation |
Lilium NV and Archer Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lilium NV and Archer Aviation
The main advantage of trading using opposite Lilium NV and Archer Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium NV position performs unexpectedly, Archer 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 Archer Aviation will offset losses from the drop in Archer Aviation's long position.| Lilium NV vs. Vertical Aerospace | Lilium NV vs. Ehang Holdings | Lilium NV vs. Rocket Lab USA | Lilium NV vs. Archer Aviation |
| Archer Aviation vs. Vertical Aerospace | Archer Aviation vs. Ehang Holdings | Archer Aviation vs. Rocket Lab USA | Archer Aviation vs. Lilium NV |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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