Correlation Between Air Lease and WOLTERS KLUWER

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

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

Diversification Opportunities for Air Lease and WOLTERS KLUWER

0.43

Correlation Coefficient

Air Lease  WOLTERS KLUWER

Very weak diversification

The 3 months correlation between Air and WOLTERS is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and WOLTERS KLUWER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WOLTERS KLUWER ADR 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 WOLTERS KLUWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WOLTERS KLUWER ADR has no effect on the direction of Air Lease i.e., Air Lease and WOLTERS KLUWER go up and down completely randomly.

Pair Corralation between Air Lease and WOLTERS KLUWER

Assuming the 90 days trading horizon Air Lease is expected to generate 2.37 times less return on investment than WOLTERS KLUWER. In addition to that, Air Lease is 1.01 times more volatile than WOLTERS KLUWER ADR. It trades about 0.03 of its total potential returns per unit of risk. WOLTERS KLUWER ADR is currently generating about 0.07 per unit of volatility. If you would invest  9,510  in WOLTERS KLUWER ADR on October 11, 2024 and sell it today you would earn a total of  6,390  from holding WOLTERS KLUWER ADR or generate 67.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Air Lease  vs.  WOLTERS KLUWER ADR

Air Lease

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 13 (%) 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.

WOLTERS KLUWER ADR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WOLTERS KLUWER ADR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, WOLTERS KLUWER 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 WOLTERS KLUWER

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

The idea behind Air Lease and WOLTERS KLUWER ADR 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.