Correlation Between Air Lease and ScanSource

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

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

Diversification Opportunities for Air Lease and ScanSource

0.71

Correlation Coefficient

Air Lease  ScanSource

Poor diversification

The 3 months correlation between Air and ScanSource is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of Air Lease i.e., Air Lease and ScanSource go up and down completely randomly.

Pair Corralation between Air Lease and ScanSource

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.71 times more return on investment than ScanSource. However, Air Lease is 1.41 times less risky than ScanSource. It trades about -0.24 of its potential returns per unit of risk. ScanSource is currently generating about -0.25 per unit of risk. If you would invest  5,114  in Air Lease on October 5, 2024 and sell it today you would lose (336.00) from holding Air Lease or give up 6.57% of portfolio value over 90 days.

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

Air Lease  vs.  ScanSource

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.

ScanSource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Air Lease and ScanSource

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

The idea behind Air Lease and ScanSource 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.