Correlation Between Air Lease and MPH Health

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

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

Diversification Opportunities for Air Lease and MPH Health

-0.28

Correlation Coefficient

Air Lease  MPH Health

Very good diversification

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

Pair Corralation between Air Lease and MPH Health

Assuming the 90 days trading horizon Air Lease is expected to generate 2.89 times less return on investment than MPH Health. But when comparing it to its historical volatility, Air Lease is 1.46 times less risky than MPH Health. It trades about 0.02 of its potential returns per unit of risk. MPH Health Care is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,486  in MPH Health Care on October 23, 2024 and sell it today you would earn a total of  854.00  from holding MPH Health Care or generate 57.47% return on investment over 90 days.

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

Air Lease  vs.  MPH Health Care

Air Lease

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

MPH Health Care

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MPH Health Care has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MPH Health is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Air Lease and MPH Health

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

The idea behind Air Lease and MPH Health Care 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.