Correlation Between Sable Offshore and Air Lease

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

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

Diversification Opportunities for Sable Offshore and Air Lease

0.17

Correlation Coefficient

Sable Offshore  Air Lease

Average diversification

The 3 months correlation between Sable and Air is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Sable Offshore 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and Air Lease go up and down completely randomly.

Pair Corralation between Sable Offshore and Air Lease

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 1.84 times more return on investment than Air Lease. However, Sable Offshore is 1.84 times more volatile than Air Lease. It trades about 0.07 of its potential returns per unit of risk. Air Lease is currently generating about 0.03 per unit of risk. If you would invest  1,010  in Sable Offshore Corp on October 4, 2024 and sell it today you would earn a total of  1,230  from holding Sable Offshore Corp or generate 121.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.56%
Values	Daily Returns

Sable Offshore Corp  vs.  Air Lease

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Sable Offshore is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Air Lease

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Sable Offshore and Air Lease

The main advantage of trading using opposite Sable Offshore and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sable Offshore 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 Sable Offshore Corp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.