Correlation Between Lilium Equity and Joby Aviation

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

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

Diversification Opportunities for Lilium Equity and Joby Aviation

-0.82

Correlation Coefficient

Lilium Equity  Joby Aviation

Pay attention - limited upside

The 3 months correlation between Lilium and Joby is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Lilium Equity Warrants and Joby Aviation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joby Aviation and Lilium Equity 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 Equity Warrants are associated (or correlated) with Joby Aviation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joby Aviation has no effect on the direction of Lilium Equity i.e., Lilium Equity and Joby Aviation go up and down completely randomly.

Pair Corralation between Lilium Equity and Joby Aviation

Assuming the 90 days horizon Lilium Equity Warrants is expected to under-perform the Joby Aviation. In addition to that, Lilium Equity is 1.44 times more volatile than Joby Aviation. It trades about -0.15 of its total potential returns per unit of risk. Joby Aviation is currently generating about 0.22 per unit of volatility. If you would invest  55.00  in Joby Aviation on August 31, 2024 and sell it today you would earn a total of  175.00  from holding Joby Aviation or generate 318.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	75.0%
Values	Daily Returns

Lilium Equity Warrants  vs.  Joby Aviation

Lilium Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lilium Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's primary indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Joby Aviation

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Joby Aviation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Joby Aviation unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lilium Equity and Joby Aviation

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

The idea behind Lilium Equity Warrants and Joby Aviation 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 Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.