Correlation Between Air Lease and Apple

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

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

Diversification Opportunities for Air Lease and Apple

0.78

Correlation Coefficient

Air Lease  Apple

Poor diversification

The 3 months correlation between Air and Apple is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Apple Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apple Inc 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 Apple. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apple Inc has no effect on the direction of Air Lease i.e., Air Lease and Apple go up and down completely randomly.

Pair Corralation between Air Lease and Apple

Assuming the 90 days trading horizon Air Lease is expected to under-perform the Apple. In addition to that, Air Lease is 2.08 times more volatile than Apple Inc. It trades about -0.11 of its total potential returns per unit of risk. Apple Inc is currently generating about 0.74 per unit of volatility. If you would invest  21,865  in Apple Inc on September 22, 2024 and sell it today you would earn a total of  2,465  from holding Apple Inc or generate 11.27% return on investment over 90 days.

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

Air Lease  vs.  Apple Inc

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 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Apple Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Apple Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile fundamental indicators, Apple displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and Apple

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

The idea behind Air Lease and Apple Inc 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.