Correlation Between Air Lease and Nasdaq

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

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

Diversification Opportunities for Air Lease and Nasdaq

0.94

Correlation Coefficient

Air Lease  Nasdaq

Almost no diversification

The 3 months correlation between Air and Nasdaq is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of Air Lease i.e., Air Lease and Nasdaq go up and down completely randomly.

Pair Corralation between Air Lease and Nasdaq

Assuming the 90 days trading horizon Air Lease is expected to generate 6.21 times less return on investment than Nasdaq. In addition to that, Air Lease is 1.58 times more volatile than Nasdaq Inc. It trades about 0.01 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.13 per unit of volatility. If you would invest  6,214  in Nasdaq Inc on October 25, 2024 and sell it today you would earn a total of  1,438  from holding Nasdaq Inc or generate 23.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.19%
Values	Daily Returns

Air Lease  vs.  Nasdaq Inc

Air Lease

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 8 (%) 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 February 2025.

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Air Lease and Nasdaq

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

The idea behind Air Lease and Nasdaq 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.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.