Correlation Between FLYHT Aerospace and Bombardier
Can any of the company-specific risk be diversified away by investing in both FLYHT Aerospace and Bombardier 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 FLYHT Aerospace and Bombardier into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLYHT Aerospace Solutions and Bombardier, you can compare the effects of market volatilities on FLYHT Aerospace and Bombardier 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 FLYHT Aerospace with a short position of Bombardier. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLYHT Aerospace and Bombardier.
Diversification Opportunities for FLYHT Aerospace and Bombardier
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between FLYHT and Bombardier is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding FLYHT Aerospace Solutions and Bombardier in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bombardier and FLYHT Aerospace 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 FLYHT Aerospace Solutions are associated (or correlated) with Bombardier. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bombardier has no effect on the direction of FLYHT Aerospace i.e., FLYHT Aerospace and Bombardier go up and down completely randomly.
Pair Corralation between FLYHT Aerospace and Bombardier
Assuming the 90 days horizon FLYHT Aerospace Solutions is expected to under-perform the Bombardier. In addition to that, FLYHT Aerospace is 1.64 times more volatile than Bombardier. It trades about -0.1 of its total potential returns per unit of risk. Bombardier is currently generating about -0.07 per unit of volatility. If you would invest 5,887 in Bombardier on January 24, 2024 and sell it today you would lose (165.00) from holding Bombardier or give up 2.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
FLYHT Aerospace Solutions vs. Bombardier
Performance |
| Timeline |
| FLYHT Aerospace Solutions |
| Bombardier |
FLYHT Aerospace and Bombardier Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLYHT Aerospace and Bombardier
The main advantage of trading using opposite FLYHT Aerospace and Bombardier positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLYHT Aerospace position performs unexpectedly, Bombardier 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 Bombardier will offset losses from the drop in Bombardier's long position.The idea behind FLYHT Aerospace Solutions and Bombardier 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.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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.
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