Correlation Between Lilium NV and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Lilium NV and AAR Corp 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 AAR Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lilium NV and AAR Corp, you can compare the effects of market volatilities on Lilium NV and AAR Corp 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 AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium NV and AAR Corp.
Diversification Opportunities for Lilium NV and AAR Corp
Significant diversification
The 3 months correlation between Lilium and AAR is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp 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 AAR Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAR Corp has no effect on the direction of Lilium NV i.e., Lilium NV and AAR Corp go up and down completely randomly.
Pair Corralation between Lilium NV and AAR Corp
Given the investment horizon of 90 days Lilium NV is expected to under-perform the AAR Corp. In addition to that, Lilium NV is 6.14 times more volatile than AAR Corp. It trades about -0.05 of its total potential returns per unit of risk. AAR Corp is currently generating about 0.0 per unit of volatility. If you would invest 7,110 in AAR Corp on September 3, 2024 and sell it today you would lose (158.00) from holding AAR Corp or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lilium NV vs. AAR Corp
Performance |
| Timeline |
| Lilium NV |
| AAR Corp |
Lilium NV and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lilium NV and AAR Corp
The main advantage of trading using opposite Lilium NV and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium NV position performs unexpectedly, AAR Corp 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 AAR Corp will offset losses from the drop in AAR Corp's long position.| Lilium NV vs. Vertical Aerospace | Lilium NV vs. Ehang Holdings | Lilium NV vs. Rocket Lab USA | Lilium NV vs. Archer Aviation |
| AAR Corp vs. Highway Holdings Limited | AAR Corp vs. QCR Holdings | AAR Corp vs. Partner Communications | AAR Corp vs. Acumen Pharmaceuticals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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