Correlation Between Lilium Equity and BAE Systems
Can any of the company-specific risk be diversified away by investing in both Lilium Equity and BAE Systems 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 BAE Systems 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 BAE Systems PLC, you can compare the effects of market volatilities on Lilium Equity and BAE Systems 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 BAE Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lilium Equity and BAE Systems.
Diversification Opportunities for Lilium Equity and BAE Systems
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lilium and BAE is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Lilium Equity Warrants and BAE Systems PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BAE Systems PLC 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 BAE Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BAE Systems PLC has no effect on the direction of Lilium Equity i.e., Lilium Equity and BAE Systems go up and down completely randomly.
Pair Corralation between Lilium Equity and BAE Systems
Assuming the 90 days horizon Lilium Equity Warrants is expected to under-perform the BAE Systems. In addition to that, Lilium Equity is 9.9 times more volatile than BAE Systems PLC. It trades about -0.06 of its total potential returns per unit of risk. BAE Systems PLC is currently generating about -0.02 per unit of volatility. If you would invest 6,941 in BAE Systems PLC on August 25, 2024 and sell it today you would lose (343.00) from holding BAE Systems PLC or give up 4.94% 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. BAE Systems PLC
Performance |
| Timeline |
| Lilium Equity Warrants |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BAE Systems PLC |
Lilium Equity and BAE Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lilium Equity and BAE Systems
The main advantage of trading using opposite Lilium Equity and BAE Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lilium Equity position performs unexpectedly, BAE Systems 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 BAE Systems will offset losses from the drop in BAE Systems' long position.| Lilium Equity vs. Joby Aviation | Lilium Equity vs. Lilium NV | Lilium Equity vs. AEye Inc | Lilium Equity vs. Microvast Holdings |
| BAE Systems vs. Element Solutions | BAE Systems vs. Orion Engineered Carbons | BAE Systems vs. Minerals Technologies | BAE Systems vs. Ingevity Corp |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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