Correlation Between Textron and Lilium Equity

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

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

Diversification Opportunities for Textron and Lilium Equity

0.37

Correlation Coefficient

Textron  Lilium Equity

Weak diversification

The 3 months correlation between Textron and Lilium is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Textron 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 Textron 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 Textron 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 Textron i.e., Textron and Lilium Equity go up and down completely randomly.

Pair Corralation between Textron and Lilium Equity

Considering the 90-day investment horizon Textron is expected to generate 11.4 times less return on investment than Lilium Equity. But when comparing it to its historical volatility, Textron is 9.32 times less risky than Lilium Equity. It trades about 0.03 of its potential returns per unit of risk. Lilium Equity Warrants is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  8.10  in Lilium Equity Warrants on September 12, 2024 and sell it today you would lose (7.40) from holding Lilium Equity Warrants or give up 91.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.35%
Values	Daily Returns

Textron  vs.  Lilium Equity Warrants

Textron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Textron has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Textron is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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 Textron and Lilium Equity

The main advantage of trading using opposite Textron and Lilium Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Textron 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 Textron 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.