Correlation Between Caltagirone SpA and Air Lease

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Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA 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 Caltagirone SpA and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and Air Lease, you can compare the effects of market volatilities on Caltagirone SpA 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 Caltagirone SpA with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and Air Lease.

Diversification Opportunities for Caltagirone SpA and Air Lease

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Caltagirone and Air is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Caltagirone SpA 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 Caltagirone 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 Caltagirone SpA i.e., Caltagirone SpA and Air Lease go up and down completely randomly.

Pair Corralation between Caltagirone SpA and Air Lease

Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.35 times more return on investment than Air Lease. However, Caltagirone SpA is 1.35 times more volatile than Air Lease. It trades about 0.1 of its potential returns per unit of risk. Air Lease is currently generating about 0.06 per unit of risk. If you would invest  377.00  in Caltagirone SpA on October 22, 2024 and sell it today you would earn a total of  265.00  from holding Caltagirone SpA or generate 70.29% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy99.56%
ValuesDaily Returns

Caltagirone SpA  vs.  Air Lease

 Performance 
       Timeline  
Caltagirone SpA 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Caltagirone SpA are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Caltagirone SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.
Air Lease 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 9 (%) 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.

Caltagirone SpA and Air Lease Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caltagirone SpA and Air Lease

The main advantage of trading using opposite Caltagirone SpA and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA 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 Caltagirone 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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