Correlation Between EQT AB and Air Lease

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

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

Diversification Opportunities for EQT AB and Air Lease

-0.34

Correlation Coefficient

EQT AB  Air Lease

Very good diversification

The 3 months correlation between EQT and Air is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding EQT AB and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and EQT AB 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 EQT AB 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 EQT AB i.e., EQT AB and Air Lease go up and down completely randomly.

Pair Corralation between EQT AB and Air Lease

Assuming the 90 days horizon EQT AB is expected to generate 2.9 times less return on investment than Air Lease. In addition to that, EQT AB is 1.32 times more volatile than Air Lease. It trades about 0.06 of its total potential returns per unit of risk. Air Lease is currently generating about 0.21 per unit of volatility. If you would invest  3,840  in Air Lease on September 12, 2024 and sell it today you would earn a total of  900.00  from holding Air Lease or generate 23.44% return on investment over 90 days.

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

EQT AB  vs.  Air Lease

EQT AB

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EQT AB are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, EQT AB may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Air Lease

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 16 (%) 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 EQT AB and Air Lease

The main advantage of trading using opposite EQT AB and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EQT AB 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 EQT AB 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.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.