Correlation Between FTAI Infrastructure and Hyliion Holdings

Can any of the company-specific risk be diversified away by investing in both FTAI Infrastructure and Hyliion Holdings 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 FTAI Infrastructure and Hyliion Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FTAI Infrastructure and Hyliion Holdings Corp, you can compare the effects of market volatilities on FTAI Infrastructure and Hyliion Holdings 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 FTAI Infrastructure with a short position of Hyliion Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FTAI Infrastructure and Hyliion Holdings.

Diversification Opportunities for FTAI Infrastructure and Hyliion Holdings

-0.33

Correlation Coefficient

FTAI Infrastructure  Hyliion Holdings

Very good diversification

The 3 months correlation between FTAI and Hyliion is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Infrastructure and Hyliion Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyliion Holdings Corp and FTAI Infrastructure 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 FTAI Infrastructure are associated (or correlated) with Hyliion Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyliion Holdings Corp has no effect on the direction of FTAI Infrastructure i.e., FTAI Infrastructure and Hyliion Holdings go up and down completely randomly.

Pair Corralation between FTAI Infrastructure and Hyliion Holdings

Considering the 90-day investment horizon FTAI Infrastructure is expected to generate 1.17 times less return on investment than Hyliion Holdings. But when comparing it to its historical volatility, FTAI Infrastructure is 2.17 times less risky than Hyliion Holdings. It trades about 0.1 of its potential returns per unit of risk. Hyliion Holdings Corp is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  180.00  in Hyliion Holdings Corp on September 13, 2024 and sell it today you would earn a total of  122.00  from holding Hyliion Holdings Corp or generate 67.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

FTAI Infrastructure  vs.  Hyliion Holdings Corp

FTAI Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FTAI Infrastructure has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward indicators, FTAI Infrastructure is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Hyliion Holdings Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hyliion Holdings Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain essential indicators, Hyliion Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FTAI Infrastructure and Hyliion Holdings

The main advantage of trading using opposite FTAI Infrastructure and Hyliion Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FTAI Infrastructure position performs unexpectedly, Hyliion Holdings 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 Hyliion Holdings will offset losses from the drop in Hyliion Holdings' long position.

The idea behind FTAI Infrastructure and Hyliion Holdings Corp 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.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.