Correlation Between Air Lease and 594918BK9

Can any of the company-specific risk be diversified away by investing in both Air Lease and 594918BK9 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 594918BK9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and MICROSOFT P 42, you can compare the effects of market volatilities on Air Lease and 594918BK9 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 594918BK9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and 594918BK9.

Diversification Opportunities for Air Lease and 594918BK9

-0.08

Correlation Coefficient

Air Lease  594918BK9

Good diversification

The 3 months correlation between Air and 594918BK9 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and MICROSOFT P 42 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MICROSOFT P 42 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 594918BK9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MICROSOFT P 42 has no effect on the direction of Air Lease i.e., Air Lease and 594918BK9 go up and down completely randomly.

Pair Corralation between Air Lease and 594918BK9

Allowing for the 90-day total investment horizon Air Lease is expected to under-perform the 594918BK9. In addition to that, Air Lease is 1.66 times more volatile than MICROSOFT P 42. It trades about -0.12 of its total potential returns per unit of risk. MICROSOFT P 42 is currently generating about 0.21 per unit of volatility. If you would invest  9,592  in MICROSOFT P 42 on October 21, 2024 and sell it today you would earn a total of  423.00  from holding MICROSOFT P 42 or generate 4.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Air Lease  vs.  MICROSOFT P 42

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.

MICROSOFT P 42

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MICROSOFT P 42 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 594918BK9 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Air Lease and 594918BK9

The main advantage of trading using opposite Air Lease and 594918BK9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, 594918BK9 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 594918BK9 will offset losses from the drop in 594918BK9's long position.

The idea behind Air Lease and MICROSOFT P 42 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.