Correlation Between Air Lease and Virtus Investment

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

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

Diversification Opportunities for Air Lease and Virtus Investment

0.81

Correlation Coefficient

Air Lease  Virtus Investment

Very poor diversification

The 3 months correlation between Air and Virtus is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Air Lease i.e., Air Lease and Virtus Investment go up and down completely randomly.

Pair Corralation between Air Lease and Virtus Investment

Assuming the 90 days trading horizon Air Lease is expected to generate 0.74 times more return on investment than Virtus Investment. However, Air Lease is 1.35 times less risky than Virtus Investment. It trades about 0.11 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.04 per unit of risk. If you would invest  4,081  in Air Lease on October 25, 2024 and sell it today you would earn a total of  419.00  from holding Air Lease or generate 10.27% return on investment over 90 days.

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

Air Lease  vs.  Virtus Investment Partners

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.

Virtus Investment

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Virtus Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Air Lease and Virtus Investment

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

The idea behind Air Lease and Virtus Investment Partners 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.