Correlation Between Air Lease and X FAB

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

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

Diversification Opportunities for Air Lease and X FAB

-0.61

Correlation Coefficient

Air Lease  X FAB

Excellent diversification

The 3 months correlation between Air and XFABF is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of Air Lease i.e., Air Lease and X FAB go up and down completely randomly.

Pair Corralation between Air Lease and X FAB

Allowing for the 90-day total investment horizon Air Lease is expected to under-perform the X FAB. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 1.91 times less risky than X FAB. The stock trades about -0.12 of its potential returns per unit of risk. The X FAB Silicon Foundries is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  501.00  in X FAB Silicon Foundries on October 21, 2024 and sell it today you would earn a total of  10.00  from holding X FAB Silicon Foundries or generate 2.0% return on investment over 90 days.

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

Air Lease  vs.  X FAB Silicon Foundries

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.

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, X FAB is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Lease and X FAB

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

The idea behind Air Lease and X FAB Silicon Foundries 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.