Correlation Between Air Lease and Microbot Medical

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

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

Diversification Opportunities for Air Lease and Microbot Medical

0.54

Correlation Coefficient

Air Lease  Microbot Medical

Very weak diversification

The 3 months correlation between Air and Microbot is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Microbot Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microbot Medical 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 Microbot Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microbot Medical has no effect on the direction of Air Lease i.e., Air Lease and Microbot Medical go up and down completely randomly.

Pair Corralation between Air Lease and Microbot Medical

Assuming the 90 days trading horizon Air Lease is expected to generate 0.56 times more return on investment than Microbot Medical. However, Air Lease is 1.79 times less risky than Microbot Medical. It trades about 0.19 of its potential returns per unit of risk. Microbot Medical is currently generating about 0.1 per unit of risk. If you would invest  3,939  in Air Lease on September 3, 2024 and sell it today you would earn a total of  821.00  from holding Air Lease or generate 20.84% return on investment over 90 days.

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

Air Lease  vs.  Microbot Medical

Air Lease

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 14 (%) 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.

Microbot Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microbot Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Microbot Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and Microbot Medical

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

The idea behind Air Lease and Microbot Medical 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.