Correlation Between Air Lease and Radiant Logistics

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

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

Diversification Opportunities for Air Lease and Radiant Logistics

0.09

Correlation Coefficient

Air Lease  Radiant Logistics

Significant diversification

The 3 months correlation between Air and Radiant is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Radiant Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radiant Logistics 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 Radiant Logistics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radiant Logistics has no effect on the direction of Air Lease i.e., Air Lease and Radiant Logistics go up and down completely randomly.

Pair Corralation between Air Lease and Radiant Logistics

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.99 times more return on investment than Radiant Logistics. However, Air Lease is 1.01 times less risky than Radiant Logistics. It trades about 0.02 of its potential returns per unit of risk. Radiant Logistics is currently generating about -0.04 per unit of risk. If you would invest  4,867  in Air Lease on December 27, 2024 and sell it today you would earn a total of  40.00  from holding Air Lease or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Air Lease  vs.  Radiant Logistics

Air Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Radiant Logistics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Radiant Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Radiant Logistics is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Air Lease and Radiant Logistics

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

The idea behind Air Lease and Radiant Logistics 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.