Correlation Between Gap, and Air Lease

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

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

Diversification Opportunities for Gap, and Air Lease

0.82

Correlation Coefficient

Gap,  Air Lease

Very poor diversification

The 3 months correlation between Gap, and Air is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Gap, 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 The Gap, 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 Gap, i.e., Gap, and Air Lease go up and down completely randomly.

Pair Corralation between Gap, and Air Lease

Considering the 90-day investment horizon The Gap, is expected to generate 1.63 times more return on investment than Air Lease. However, Gap, is 1.63 times more volatile than Air Lease. It trades about 0.0 of its potential returns per unit of risk. Air Lease is currently generating about -0.12 per unit of risk. If you would invest  2,415  in The Gap, on September 27, 2024 and sell it today you would lose (12.00) from holding The Gap, or give up 0.5% of portfolio value over 90 days.

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

The Gap,  vs.  Air Lease

Gap,

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

Air Lease

Risk-Adjusted Performance

6 of 100

Modest

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 fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Gap, and Air Lease

The main advantage of trading using opposite Gap, and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gap, 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 The Gap, 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.