Correlation Between COMMERCIAL VEHICLE and Air Lease

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

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

Diversification Opportunities for COMMERCIAL VEHICLE and Air Lease

-0.86

Correlation Coefficient

COMMERCIAL VEHICLE  Air Lease

Pay attention - limited upside

The 3 months correlation between COMMERCIAL and Air is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding COMMERCIAL VEHICLE and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE i.e., COMMERCIAL VEHICLE and Air Lease go up and down completely randomly.

Pair Corralation between COMMERCIAL VEHICLE and Air Lease

Assuming the 90 days trading horizon COMMERCIAL VEHICLE is expected to under-perform the Air Lease. In addition to that, COMMERCIAL VEHICLE is 3.13 times more volatile than Air Lease. It trades about -0.12 of its total potential returns per unit of risk. Air Lease is currently generating about 0.17 per unit of volatility. If you would invest  4,101  in Air Lease on September 27, 2024 and sell it today you would earn a total of  539.00  from holding Air Lease or generate 13.14% return on investment over 90 days.

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

COMMERCIAL VEHICLE  vs.  Air Lease

COMMERCIAL VEHICLE

Risk-Adjusted Performance

0 of 100

Very Weak

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

Air Lease

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with COMMERCIAL VEHICLE and Air Lease

The main advantage of trading using opposite COMMERCIAL VEHICLE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMMERCIAL VEHICLE 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 COMMERCIAL VEHICLE 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.