Correlation Between CAP LEASE and State Bank

Can any of the company-specific risk be diversified away by investing in both CAP LEASE and State Bank 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 State Bank 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 State Bank of, you can compare the effects of market volatilities on CAP LEASE and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and State Bank.

Diversification Opportunities for CAP LEASE and State Bank

-0.67

Correlation Coefficient

CAP LEASE  State Bank

Excellent diversification

The 3 months correlation between CAP and State is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of CAP LEASE i.e., CAP LEASE and State Bank go up and down completely randomly.

Pair Corralation between CAP LEASE and State Bank

Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the State Bank. In addition to that, CAP LEASE is 1.56 times more volatile than State Bank of. It trades about -0.19 of its total potential returns per unit of risk. State Bank of is currently generating about 0.07 per unit of volatility. If you would invest  9,420  in State Bank of on September 14, 2024 and sell it today you would earn a total of  600.00  from holding State Bank of or generate 6.37% return on investment over 90 days.

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

CAP LEASE AVIATION  vs.  State Bank of

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 January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

State Bank

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in State Bank of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, State Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CAP LEASE and State Bank

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

The idea behind CAP LEASE AVIATION and State Bank of 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.