Correlation Between Transdigm Group and Lilium NV
Can any of the company-specific risk be diversified away by investing in both Transdigm Group and Lilium NV 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 Transdigm Group and Lilium NV into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transdigm Group Incorporated and Lilium NV, you can compare the effects of market volatilities on Transdigm Group and Lilium NV 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 Transdigm Group with a short position of Lilium NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transdigm Group and Lilium NV.
Diversification Opportunities for Transdigm Group and Lilium NV
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transdigm and Lilium is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Transdigm Group Incorporated and Lilium NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium NV and Transdigm Group 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 Transdigm Group Incorporated are associated (or correlated) with Lilium NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium NV has no effect on the direction of Transdigm Group i.e., Transdigm Group and Lilium NV go up and down completely randomly.
Pair Corralation between Transdigm Group and Lilium NV
Considering the 90-day investment horizon Transdigm Group Incorporated is expected to under-perform the Lilium NV. But the stock apears to be less risky and, when comparing its historical volatility, Transdigm Group Incorporated is 12.56 times less risky than Lilium NV. The stock trades about -0.1 of its potential returns per unit of risk. The Lilium NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Lilium NV on August 28, 2024 and sell it today you would lose (4.01) from holding Lilium NV or give up 28.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transdigm Group Incorporated vs. Lilium NV
Performance |
| Timeline |
| Transdigm Group |
| Lilium NV |
Transdigm Group and Lilium NV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transdigm Group and Lilium NV
The main advantage of trading using opposite Transdigm Group and Lilium NV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transdigm Group position performs unexpectedly, Lilium NV 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 Lilium NV will offset losses from the drop in Lilium NV's long position.| Transdigm Group vs. HEICO | Transdigm Group vs. L3Harris Technologies | Transdigm Group vs. Huntington Ingalls Industries | Transdigm Group vs. AeroVironment |
| Lilium NV vs. Vertical Aerospace | Lilium NV vs. Ehang Holdings | Lilium NV vs. Rocket Lab USA | Lilium NV vs. Archer Aviation |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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