Correlation Between China Aircraft and Broadstone Net

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

By analyzing existing cross correlation between China Aircraft Leasing and Broadstone Net Lease, you can compare the effects of market volatilities on China Aircraft and Broadstone Net 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 China Aircraft with a short position of Broadstone Net. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Aircraft and Broadstone Net.

Diversification Opportunities for China Aircraft and Broadstone Net

0.52

Correlation Coefficient

China Aircraft  Broadstone Net

Very weak diversification

The 3 months correlation between China and Broadstone is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding China Aircraft Leasing and Broadstone Net Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Broadstone Net Lease and China Aircraft 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 China Aircraft Leasing are associated (or correlated) with Broadstone Net. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Broadstone Net Lease has no effect on the direction of China Aircraft i.e., China Aircraft and Broadstone Net go up and down completely randomly.

Pair Corralation between China Aircraft and Broadstone Net

Assuming the 90 days horizon China Aircraft Leasing is expected to generate 1.69 times more return on investment than Broadstone Net. However, China Aircraft is 1.69 times more volatile than Broadstone Net Lease. It trades about 0.13 of its potential returns per unit of risk. Broadstone Net Lease is currently generating about 0.11 per unit of risk. If you would invest  40.00  in China Aircraft Leasing on December 29, 2024 and sell it today you would earn a total of  7.00  from holding China Aircraft Leasing or generate 17.5% return on investment over 90 days.

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

China Aircraft Leasing  vs.  Broadstone Net Lease

China Aircraft Leasing

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Aircraft Leasing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent essential indicators, China Aircraft reported solid returns over the last few months and may actually be approaching a breakup point.

Broadstone Net Lease

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Broadstone Net Lease are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Broadstone Net may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with China Aircraft and Broadstone Net

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

The idea behind China Aircraft Leasing and Broadstone Net Lease 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.