Correlation Between EIDESVIK OFFSHORE and Air Lease

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

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

Diversification Opportunities for EIDESVIK OFFSHORE and Air Lease

0.64

Correlation Coefficient

EIDESVIK OFFSHORE  Air Lease

Poor diversification

The 3 months correlation between EIDESVIK and Air is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and Air Lease go up and down completely randomly.

Pair Corralation between EIDESVIK OFFSHORE and Air Lease

Assuming the 90 days horizon EIDESVIK OFFSHORE NK is expected to under-perform the Air Lease. In addition to that, EIDESVIK OFFSHORE is 1.41 times more volatile than Air Lease. It trades about -0.05 of its total potential returns per unit of risk. Air Lease is currently generating about -0.07 per unit of volatility. If you would invest  4,618  in Air Lease on December 20, 2024 and sell it today you would lose (398.00) from holding Air Lease or give up 8.62% of portfolio value over 90 days.

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

EIDESVIK OFFSHORE NK  vs.  Air Lease

EIDESVIK OFFSHORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days EIDESVIK OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Air Lease

Risk-Adjusted Performance

Very Weak

Over the last 90 days Air Lease has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's essential indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with EIDESVIK OFFSHORE and Air Lease

The main advantage of trading using opposite EIDESVIK OFFSHORE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..