Correlation Between Air Lease and BP Plc
Can any of the company-specific risk be diversified away by investing in both Air Lease and BP Plc 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 BP Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and BP plc, you can compare the effects of market volatilities on Air Lease and BP Plc 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 BP Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and BP Plc.
Diversification Opportunities for Air Lease and BP Plc
Very good diversification
The 3 months correlation between Air and BSU is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and BP plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP plc 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 BP Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP plc has no effect on the direction of Air Lease i.e., Air Lease and BP Plc go up and down completely randomly.
Pair Corralation between Air Lease and BP Plc
Assuming the 90 days trading horizon Air Lease is expected to under-perform the BP Plc. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 1.05 times less risky than BP Plc. The stock trades about -0.08 of its potential returns per unit of risk. The BP plc is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,702 in BP plc on December 5, 2024 and sell it today you would earn a total of 238.00 from holding BP plc or generate 8.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 98.33% |
Values | Daily Returns |
Air Lease vs. BP plc
Performance |
Timeline |
Air Lease |
BP plc |
Air Lease and BP Plc Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Lease and BP Plc
The main advantage of trading using opposite Air Lease and BP Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, BP Plc 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 BP Plc will offset losses from the drop in BP Plc's long position.Air Lease vs. ALTAIR RES INC | Air Lease vs. Sportsmans Warehouse Holdings | Air Lease vs. Alaska Air Group | Air Lease vs. Wizz Air Holdings |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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