Correlation Between ELEMENT FLEET and Air Lease

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

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

Diversification Opportunities for ELEMENT FLEET and Air Lease

0.64

Correlation Coefficient

ELEMENT FLEET  Air Lease

Poor diversification

The 3 months correlation between ELEMENT and Air is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ELEMENT FLEET MGMT and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and ELEMENT FLEET 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 ELEMENT FLEET MGMT are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of ELEMENT FLEET i.e., ELEMENT FLEET and Air Lease go up and down completely randomly.

Pair Corralation between ELEMENT FLEET and Air Lease

Assuming the 90 days horizon ELEMENT FLEET is expected to generate 1.75 times less return on investment than Air Lease. In addition to that, ELEMENT FLEET is 1.17 times more volatile than Air Lease. It trades about 0.07 of its total potential returns per unit of risk. Air Lease is currently generating about 0.14 per unit of volatility. If you would invest  4,118  in Air Lease on September 2, 2024 and sell it today you would earn a total of  642.00  from holding Air Lease or generate 15.59% return on investment over 90 days.

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

ELEMENT FLEET MGMT  vs.  Air Lease

ELEMENT FLEET MGMT

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ELEMENT FLEET MGMT are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, ELEMENT FLEET may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Air Lease

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ELEMENT FLEET and Air Lease

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

The idea behind ELEMENT FLEET MGMT and Air Lease 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.