Correlation Between Lilium NV and Momentus

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

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

Diversification Opportunities for Lilium NV and Momentus

0.08

Correlation Coefficient

Lilium NV  Momentus

Significant diversification

The 3 months correlation between Lilium and Momentus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Lilium NV and Momentus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Momentus and Lilium NV 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 Lilium NV are associated (or correlated) with Momentus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Momentus has no effect on the direction of Lilium NV i.e., Lilium NV and Momentus go up and down completely randomly.

Pair Corralation between Lilium NV and Momentus

Given the investment horizon of 90 days Lilium NV is expected to under-perform the Momentus. But the stock apears to be less risky and, when comparing its historical volatility, Lilium NV is 1.05 times less risky than Momentus. The stock trades about -0.06 of its potential returns per unit of risk. The Momentus is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Momentus on August 31, 2024 and sell it today you would lose (18.00) from holding Momentus or give up 24.66% of portfolio value over 90 days.

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

Lilium NV  vs.  Momentus

Lilium NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lilium NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Momentus

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Momentus are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Momentus unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lilium NV and Momentus

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

The idea behind Lilium NV and Momentus 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 Anywhere module to track or share privately all of your investments from the convenience of any device.