Correlation Between Société Générale and Air Lease

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

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

Diversification Opportunities for Société Générale and Air Lease

0.66

Correlation Coefficient

Société Générale  Air Lease

Poor diversification

The 3 months correlation between Société and Air is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Socit Gnrale Socit and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Société Générale 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 Socit Gnrale Socit 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 Société Générale i.e., Société Générale and Air Lease go up and down completely randomly.

Pair Corralation between Société Générale and Air Lease

Assuming the 90 days trading horizon Socit Gnrale Socit is expected to generate 1.23 times more return on investment than Air Lease. However, Société Générale is 1.23 times more volatile than Air Lease. It trades about 0.06 of its potential returns per unit of risk. Air Lease is currently generating about -0.14 per unit of risk. If you would invest  2,674  in Socit Gnrale Socit on October 10, 2024 and sell it today you would earn a total of  33.00  from holding Socit Gnrale Socit or generate 1.23% return on investment over 90 days.

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

Socit Gnrale Socit  vs.  Air Lease

Socit Gnrale Socit

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Socit Gnrale Socit are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, Société Générale unveiled solid returns over the last few months and may actually be approaching a breakup point.

Air Lease

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 13 (%) 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 Société Générale and Air Lease

The main advantage of trading using opposite Société Générale and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Société Générale 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 Socit Gnrale Socit 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..