Correlation Between Lilium NV and Howmet Aerospace
Can any of the company-specific risk be diversified away by investing in both Lilium NV and Howmet Aerospace 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 Howmet Aerospace into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lilium NV and Howmet Aerospace, you can compare the effects of market volatilities on Lilium NV and Howmet Aerospace 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 Howmet Aerospace. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium NV and Howmet Aerospace.
Diversification Opportunities for Lilium NV and Howmet Aerospace
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lilium and Howmet is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Howmet Aerospace in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Howmet Aerospace 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 Howmet Aerospace. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Howmet Aerospace has no effect on the direction of Lilium NV i.e., Lilium NV and Howmet Aerospace go up and down completely randomly.
Pair Corralation between Lilium NV and Howmet Aerospace
Given the investment horizon of 90 days Lilium NV is expected to under-perform the Howmet Aerospace. In addition to that, Lilium NV is 4.94 times more volatile than Howmet Aerospace. It trades about -0.02 of its total potential returns per unit of risk. Howmet Aerospace is currently generating about 0.14 per unit of volatility. If you would invest 4,454 in Howmet Aerospace on August 31, 2024 and sell it today you would earn a total of 7,216 from holding Howmet Aerospace or generate 162.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lilium NV vs. Howmet Aerospace
Performance |
| Timeline |
| Lilium NV |
| Howmet Aerospace |
Lilium NV and Howmet Aerospace Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lilium NV and Howmet Aerospace
The main advantage of trading using opposite Lilium NV and Howmet Aerospace positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium NV position performs unexpectedly, Howmet Aerospace 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 Howmet Aerospace will offset losses from the drop in Howmet Aerospace's long position.| Lilium NV vs. Vertical Aerospace | Lilium NV vs. Ehang Holdings | Lilium NV vs. Rocket Lab USA | Lilium NV vs. Archer Aviation |
| Howmet Aerospace vs. Curtiss Wright | Howmet Aerospace vs. Mercury Systems | Howmet Aerospace vs. AAR Corp | Howmet Aerospace vs. Ducommun Incorporated |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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