Correlation Between PS Business and Air Lease

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

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

Diversification Opportunities for PS Business and Air Lease

0.0

Correlation Coefficient

PS Business  Air Lease

Pay attention - limited upside

The 3 months correlation between PSBZP and Air is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PS Business Parks and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and PS Business 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 PS Business Parks 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 PS Business i.e., PS Business and Air Lease go up and down completely randomly.

Pair Corralation between PS Business and Air Lease

If you would invest  4,935  in Air Lease on December 26, 2024 and sell it today you would lose (33.00) from holding Air Lease or give up 0.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

PS Business Parks  vs.  Air Lease

PS Business Parks

Risk-Adjusted Performance

Very Weak

Over the last 90 days PS Business Parks has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, PS Business is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

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 quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with PS Business and Air Lease

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