Correlation Between DT Cloud and Air Lease

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

By analyzing existing cross correlation between DT Cloud Star and Air Lease, you can compare the effects of market volatilities on DT Cloud and Air Lease 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 DT Cloud with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of DT Cloud and Air Lease.

Diversification Opportunities for DT Cloud and Air Lease

0.8

Correlation Coefficient

DT Cloud  Air Lease

Very poor diversification

The 3 months correlation between DTSQ and Air is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding DT Cloud Star and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and DT Cloud 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 DT Cloud Star are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of DT Cloud i.e., DT Cloud and Air Lease go up and down completely randomly.

Pair Corralation between DT Cloud and Air Lease

Given the investment horizon of 90 days DT Cloud is expected to generate 20.89 times less return on investment than Air Lease. But when comparing it to its historical volatility, DT Cloud Star is 12.73 times less risky than Air Lease. It trades about 0.03 of its potential returns per unit of risk. Air Lease is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  4,771  in Air Lease on September 21, 2024 and sell it today you would earn a total of  86.00  from holding Air Lease or generate 1.8% return on investment over 90 days.

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

DT Cloud Star  vs.  Air Lease

DT Cloud Star

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DT Cloud Star are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, DT Cloud is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Air Lease

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DT Cloud and Air Lease

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

The idea behind DT Cloud Star and Air 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.

Check out your portfolio center.

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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.