Correlation Between FTAI Aviation and Eastern

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

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

Diversification Opportunities for FTAI Aviation and Eastern

-0.68

Correlation Coefficient

FTAI Aviation  Eastern

Excellent diversification

The 3 months correlation between FTAI and Eastern is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding FTAI Aviation Ltd and Eastern Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern and FTAI Aviation 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 Aviation Ltd are associated (or correlated) with Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern has no effect on the direction of FTAI Aviation i.e., FTAI Aviation and Eastern go up and down completely randomly.

Pair Corralation between FTAI Aviation and Eastern

Assuming the 90 days horizon FTAI Aviation Ltd is expected to generate 0.46 times more return on investment than Eastern. However, FTAI Aviation Ltd is 2.18 times less risky than Eastern. It trades about -0.1 of its potential returns per unit of risk. Eastern Co is currently generating about -0.06 per unit of risk. If you would invest  2,714  in FTAI Aviation Ltd on September 27, 2024 and sell it today you would lose (64.00) from holding FTAI Aviation Ltd or give up 2.36% of portfolio value over 90 days.

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

FTAI Aviation Ltd  vs.  Eastern Co

FTAI Aviation

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in FTAI Aviation Ltd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, FTAI Aviation is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Eastern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's primary indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with FTAI Aviation and Eastern

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

The idea behind FTAI Aviation Ltd and Eastern Co 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.