Correlation Between Triumph and Lilium Equity

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

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

Diversification Opportunities for Triumph and Lilium Equity

-0.67

Correlation Coefficient

Triumph  Lilium Equity

Excellent diversification

The 3 months correlation between Triumph and Lilium is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Triumph Group and Lilium Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium Equity Warrants and Triumph 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 Triumph Group are associated (or correlated) with Lilium Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium Equity Warrants has no effect on the direction of Triumph i.e., Triumph and Lilium Equity go up and down completely randomly.

Pair Corralation between Triumph and Lilium Equity

Considering the 90-day investment horizon Triumph Group is expected to generate 0.22 times more return on investment than Lilium Equity. However, Triumph Group is 4.57 times less risky than Lilium Equity. It trades about 0.14 of its potential returns per unit of risk. Lilium Equity Warrants is currently generating about -0.16 per unit of risk. If you would invest  1,358  in Triumph Group on September 12, 2024 and sell it today you would earn a total of  531.00  from holding Triumph Group or generate 39.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	64.06%
Values	Daily Returns

Triumph Group  vs.  Lilium Equity Warrants

Triumph Group

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Triumph Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical and fundamental indicators, Triumph demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Triumph and Lilium Equity

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

The idea behind Triumph Group and Lilium Equity Warrants 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.