Correlation Between Air Lease and RELIANCE

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

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

Diversification Opportunities for Air Lease and RELIANCE

0.21

Correlation Coefficient

Air Lease  RELIANCE

Modest diversification

The 3 months correlation between Air and RELIANCE is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and RELIANCE STL ALUM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELIANCE STL ALUM 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 RELIANCE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELIANCE STL ALUM has no effect on the direction of Air Lease i.e., Air Lease and RELIANCE go up and down completely randomly.

Pair Corralation between Air Lease and RELIANCE

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.62 times more return on investment than RELIANCE. However, Air Lease is 1.61 times less risky than RELIANCE. It trades about -0.07 of its potential returns per unit of risk. RELIANCE STL ALUM is currently generating about -0.37 per unit of risk. If you would invest  5,068  in Air Lease on September 29, 2024 and sell it today you would lose (110.00) from holding Air Lease or give up 2.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	20.0%
Values	Daily Returns

Air Lease  vs.  RELIANCE STL ALUM

Air Lease

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 8 (%) 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.

RELIANCE STL ALUM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RELIANCE STL ALUM has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for RELIANCE STL ALUM investors.

Pair Trading with Air Lease and RELIANCE

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

The idea behind Air Lease and RELIANCE STL ALUM 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.