Correlation Between Air Lease and Snap On

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

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

Diversification Opportunities for Air Lease and Snap On

0.86

Correlation Coefficient

Air Lease  Snap On

Very poor diversification

The 3 months correlation between Air and Snap is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Snap On in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snap On 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 Snap On. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snap On has no effect on the direction of Air Lease i.e., Air Lease and Snap On go up and down completely randomly.

Pair Corralation between Air Lease and Snap On

Allowing for the 90-day total investment horizon Air Lease is expected to under-perform the Snap On. In addition to that, Air Lease is 1.88 times more volatile than Snap On. It trades about -0.07 of its total potential returns per unit of risk. Snap On is currently generating about 0.08 per unit of volatility. If you would invest  34,437  in Snap On on October 24, 2024 and sell it today you would earn a total of  413.00  from holding Snap On or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	94.74%
Values	Daily Returns

Air Lease  vs.  Snap On

Air Lease

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 5 (%) 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.

Snap On

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Snap On are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Snap On may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Air Lease and Snap On

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

The idea behind Air Lease and Snap On 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 Commodity Directory module to find actively traded commodities issued by global exchanges.