Correlation Between CAP LEASE and Pets At

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

By analyzing existing cross correlation between CAP LEASE AVIATION and Pets at Home, you can compare the effects of market volatilities on CAP LEASE and Pets At 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 CAP LEASE with a short position of Pets At. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and Pets At.

Diversification Opportunities for CAP LEASE and Pets At

0.78

Correlation Coefficient

CAP LEASE  Pets At

Poor diversification

The 3 months correlation between CAP and Pets is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home and CAP 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 CAP LEASE AVIATION are associated (or correlated) with Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of CAP LEASE i.e., CAP LEASE and Pets At go up and down completely randomly.

Pair Corralation between CAP LEASE and Pets At

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to generate 0.68 times more return on investment than Pets At. However, CAP LEASE AVIATION is 1.47 times less risky than Pets At. It trades about 0.23 of its potential returns per unit of risk. Pets at Home is currently generating about -0.37 per unit of risk. If you would invest  48.00  in CAP LEASE AVIATION on October 6, 2024 and sell it today you would earn a total of  2.00  from holding CAP LEASE AVIATION or generate 4.17% return on investment over 90 days.

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

CAP LEASE AVIATION  vs.  Pets at Home

CAP LEASE AVIATION

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAP LEASE AVIATION has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pets at Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pets at Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CAP LEASE and Pets At

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

The idea behind CAP LEASE AVIATION and Pets at Home 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.