Correlation Between Air Lease and Allient

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

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

Diversification Opportunities for Air Lease and Allient

0.95

Correlation Coefficient

Air Lease  Allient

Almost no diversification

The 3 months correlation between Air and Allient is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Air Lease 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 Air Lease are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Air Lease i.e., Air Lease and Allient go up and down completely randomly.

Pair Corralation between Air Lease and Allient

Allowing for the 90-day total investment horizon Air Lease is expected to generate 3.34 times less return on investment than Allient. But when comparing it to its historical volatility, Air Lease is 1.72 times less risky than Allient. It trades about 0.12 of its potential returns per unit of risk. Allient is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,807  in Allient on October 6, 2024 and sell it today you would earn a total of  754.00  from holding Allient or generate 41.73% return on investment over 90 days.

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

Air Lease  vs.  Allient

Air Lease

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Allient

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and Allient

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

The idea behind Air Lease and Allient 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.