Correlation Between Lilium Equity and AAR Corp
Can any of the company-specific risk be diversified away by investing in both Lilium Equity 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 Equity 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 Equity Warrants and AAR Corp, you can compare the effects of market volatilities on Lilium Equity 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 Equity with a short position of AAR Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium Equity and AAR Corp.
Diversification Opportunities for Lilium Equity and AAR Corp
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lilium and AAR is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Lilium Equity Warrants and AAR Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAR Corp and Lilium Equity 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 Equity Warrants 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 Equity i.e., Lilium Equity and AAR Corp go up and down completely randomly.
Pair Corralation between Lilium Equity and AAR Corp
Assuming the 90 days horizon Lilium Equity Warrants is expected to under-perform the AAR Corp. In addition to that, Lilium Equity is 6.39 times more volatile than AAR Corp. It trades about -0.06 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 7,080 in AAR Corp on August 25, 2024 and sell it today you would lose (172.00) from holding AAR Corp or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.27% |
| Values | Daily Returns |
Lilium Equity Warrants vs. AAR Corp
Performance |
| Timeline |
| Lilium Equity Warrants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AAR Corp |
Lilium Equity and AAR Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lilium Equity and AAR Corp
The main advantage of trading using opposite Lilium Equity and AAR Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium Equity 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 Equity vs. Joby Aviation | Lilium Equity vs. Lilium NV | Lilium Equity vs. AEye Inc | Lilium Equity vs. Microvast Holdings |
| AAR Corp vs. Curtiss Wright | AAR Corp vs. Hexcel | AAR Corp vs. Moog Inc | AAR Corp 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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