Correlation Between Ducommun Incorporated and Lilium NV

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

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

Diversification Opportunities for Ducommun Incorporated and Lilium NV

-0.38

Correlation Coefficient

Ducommun Incorporated  Lilium NV

Very good diversification

The 3 months correlation between Ducommun and Lilium is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Ducommun Incorporated and Lilium NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lilium NV and Ducommun Incorporated 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 Ducommun Incorporated are associated (or correlated) with Lilium NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lilium NV has no effect on the direction of Ducommun Incorporated i.e., Ducommun Incorporated and Lilium NV go up and down completely randomly.

Pair Corralation between Ducommun Incorporated and Lilium NV

Considering the 90-day investment horizon Ducommun Incorporated is expected to generate 0.52 times more return on investment than Lilium NV. However, Ducommun Incorporated is 1.9 times less risky than Lilium NV. It trades about 0.05 of its potential returns per unit of risk. Lilium NV is currently generating about -0.07 per unit of risk. If you would invest  5,964  in Ducommun Incorporated on July 12, 2024 and sell it today you would earn a total of  333.00  from holding Ducommun Incorporated or generate 5.58% return on investment over 90 days.

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

Ducommun Incorporated  vs.  Lilium NV

Ducommun Incorporated

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ducommun Incorporated are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Ducommun Incorporated may actually be approaching a critical reversion point that can send shares even higher in November 2024.

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 November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ducommun Incorporated and Lilium NV

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

The idea behind Ducommun Incorporated and Lilium NV 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.