Correlation Between Air Lease and 8426EPAD0

Can any of the company-specific risk be diversified away by investing in both Air Lease and 8426EPAD0 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 8426EPAD0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and US8426EPAD09, you can compare the effects of market volatilities on Air Lease and 8426EPAD0 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 8426EPAD0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and 8426EPAD0.

Diversification Opportunities for Air Lease and 8426EPAD0

-0.28

Correlation Coefficient

Air Lease  8426EPAD0

Very good diversification

The 3 months correlation between Air and 8426EPAD0 is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and US8426EPAD09 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US8426EPAD09 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 8426EPAD0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US8426EPAD09 has no effect on the direction of Air Lease i.e., Air Lease and 8426EPAD0 go up and down completely randomly.

Pair Corralation between Air Lease and 8426EPAD0

Allowing for the 90-day total investment horizon Air Lease is expected to generate 2.58 times more return on investment than 8426EPAD0. However, Air Lease is 2.58 times more volatile than US8426EPAD09. It trades about 0.03 of its potential returns per unit of risk. US8426EPAD09 is currently generating about 0.04 per unit of risk. If you would invest  4,781  in Air Lease on December 29, 2024 and sell it today you would earn a total of  127.00  from holding Air Lease or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

Air Lease  vs.  US8426EPAD09

Air Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 2 (%) 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.

US8426EPAD09

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in US8426EPAD09 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, 8426EPAD0 is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Air Lease and 8426EPAD0

The main advantage of trading using opposite Air Lease and 8426EPAD0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, 8426EPAD0 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 8426EPAD0 will offset losses from the drop in 8426EPAD0's long position.

The idea behind Air Lease and US8426EPAD09 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.