Correlation Between Air Lease and ChargePoint Holdings

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

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

Diversification Opportunities for Air Lease and ChargePoint Holdings

-0.63

Correlation Coefficient

Air Lease  ChargePoint Holdings

Excellent diversification

The 3 months correlation between Air and ChargePoint is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and ChargePoint Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ChargePoint Holdings 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 ChargePoint Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ChargePoint Holdings has no effect on the direction of Air Lease i.e., Air Lease and ChargePoint Holdings go up and down completely randomly.

Pair Corralation between Air Lease and ChargePoint Holdings

Allowing for the 90-day total investment horizon Air Lease is expected to under-perform the ChargePoint Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 3.86 times less risky than ChargePoint Holdings. The stock trades about -0.12 of its potential returns per unit of risk. The ChargePoint Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  115.00  in ChargePoint Holdings on September 27, 2024 and sell it today you would earn a total of  1.00  from holding ChargePoint Holdings or generate 0.87% return on investment over 90 days.

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

Air Lease  vs.  ChargePoint Holdings

Air Lease

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

ChargePoint Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ChargePoint Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Air Lease and ChargePoint Holdings

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

The idea behind Air Lease and ChargePoint Holdings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.