Correlation Between Nasdaq and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both Nasdaq and FTAI 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 Nasdaq and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and FTAI Aviation Ltd, you can compare the effects of market volatilities on Nasdaq and FTAI 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 Nasdaq with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and FTAI Aviation.
Diversification Opportunities for Nasdaq and FTAI Aviation
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nasdaq and FTAI is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and Nasdaq 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 Nasdaq Inc are associated (or correlated) with FTAI Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FTAI Aviation has no effect on the direction of Nasdaq i.e., Nasdaq and FTAI Aviation go up and down completely randomly.
Pair Corralation between Nasdaq and FTAI Aviation
Given the investment horizon of 90 days Nasdaq is expected to generate 1.33 times less return on investment than FTAI Aviation. In addition to that, Nasdaq is 1.09 times more volatile than FTAI Aviation Ltd. It trades about 0.04 of its total potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.05 per unit of volatility. If you would invest 2,121 in FTAI Aviation Ltd on August 26, 2024 and sell it today you would earn a total of 629.00 from holding FTAI Aviation Ltd or generate 29.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 87.12% |
| Values | Daily Returns |
Nasdaq Inc vs. FTAI Aviation Ltd
Performance |
| Timeline |
| Nasdaq Inc |
| FTAI Aviation |
Nasdaq and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq and FTAI Aviation
The main advantage of trading using opposite Nasdaq and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, FTAI 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 FTAI Aviation will offset losses from the drop in FTAI Aviation's long position.The idea behind Nasdaq Inc and FTAI Aviation Ltd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| FTAI Aviation vs. Ryder System | FTAI Aviation vs. Air Lease | FTAI Aviation vs. Vestis | FTAI Aviation vs. Willis Lease Finance |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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