Correlation Between Mount Gibson and Air Lease

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

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

Diversification Opportunities for Mount Gibson and Air Lease

-0.53

Correlation Coefficient

Mount Gibson  Air Lease

Excellent diversification

The 3 months correlation between Mount and Air is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mount Gibson Iron and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Mount Gibson 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 Mount Gibson Iron 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 Mount Gibson i.e., Mount Gibson and Air Lease go up and down completely randomly.

Pair Corralation between Mount Gibson and Air Lease

Assuming the 90 days horizon Mount Gibson Iron is expected to under-perform the Air Lease. In addition to that, Mount Gibson is 3.01 times more volatile than Air Lease. It trades about -0.01 of its total potential returns per unit of risk. Air Lease is currently generating about 0.03 per unit of volatility. If you would invest  3,874  in Air Lease on October 11, 2024 and sell it today you would earn a total of  686.00  from holding Air Lease or generate 17.71% return on investment over 90 days.

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

Mount Gibson Iron  vs.  Air Lease

Mount Gibson Iron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mount Gibson Iron has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Air Lease

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mount Gibson and Air Lease

The main advantage of trading using opposite Mount Gibson and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mount Gibson 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 Mount Gibson Iron 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.