Correlation Between REVO INSURANCE and Air Lease

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

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

Diversification Opportunities for REVO INSURANCE and Air Lease

0.84

Correlation Coefficient

REVO INSURANCE  Air Lease

Very poor diversification

The 3 months correlation between REVO and Air is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Air Lease go up and down completely randomly.

Pair Corralation between REVO INSURANCE and Air Lease

Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 1.17 times more return on investment than Air Lease. However, REVO INSURANCE is 1.17 times more volatile than Air Lease. It trades about 0.25 of its potential returns per unit of risk. Air Lease is currently generating about -0.07 per unit of risk. If you would invest  1,080  in REVO INSURANCE SPA on September 28, 2024 and sell it today you would earn a total of  75.00  from holding REVO INSURANCE SPA or generate 6.94% return on investment over 90 days.

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

REVO INSURANCE SPA  vs.  Air Lease

REVO INSURANCE SPA

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in REVO INSURANCE SPA are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, REVO INSURANCE reported solid returns over the last few months and may actually be approaching a breakup point.

Air Lease

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with REVO INSURANCE and Air Lease

The main advantage of trading using opposite REVO INSURANCE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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 REVO INSURANCE SPA 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.