Correlation Between NextNav Warrant and FTAI Aviation
Can any of the company-specific risk be diversified away by investing in both NextNav Warrant 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 NextNav Warrant and FTAI Aviation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextNav Warrant and FTAI Aviation Ltd, you can compare the effects of market volatilities on NextNav Warrant 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 NextNav Warrant with a short position of FTAI Aviation. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextNav Warrant and FTAI Aviation.
Diversification Opportunities for NextNav Warrant and FTAI Aviation
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NextNav and FTAI is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding NextNav Warrant and FTAI Aviation Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FTAI Aviation and NextNav Warrant 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 NextNav Warrant 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 NextNav Warrant i.e., NextNav Warrant and FTAI Aviation go up and down completely randomly.
Pair Corralation between NextNav Warrant and FTAI Aviation
Assuming the 90 days horizon NextNav Warrant is expected to generate 5.35 times more return on investment than FTAI Aviation. However, NextNav Warrant is 5.35 times more volatile than FTAI Aviation Ltd. It trades about 0.36 of its potential returns per unit of risk. FTAI Aviation Ltd is currently generating about 0.06 per unit of risk. If you would invest 250.00 in NextNav Warrant on September 12, 2024 and sell it today you would earn a total of 431.00 from holding NextNav Warrant or generate 172.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextNav Warrant vs. FTAI Aviation Ltd
Performance |
| Timeline |
| NextNav Warrant |
| FTAI Aviation |
NextNav Warrant and FTAI Aviation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextNav Warrant and FTAI Aviation
The main advantage of trading using opposite NextNav Warrant and FTAI Aviation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextNav Warrant 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 NextNav Warrant 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. Empresa Distribuidora y | FTAI Aviation vs. United Utilities Group | FTAI Aviation vs. Treasury Wine Estates | FTAI Aviation vs. China Tontine Wines |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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