Correlation Between Zimmer Biomet and Air Lease

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

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

Diversification Opportunities for Zimmer Biomet and Air Lease

0.83

Correlation Coefficient

Zimmer Biomet  Air Lease

Very poor diversification

The 3 months correlation between Zimmer and Air is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Zimmer Biomet Holdings and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Zimmer Biomet 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 Zimmer Biomet Holdings 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 Zimmer Biomet i.e., Zimmer Biomet and Air Lease go up and down completely randomly.

Pair Corralation between Zimmer Biomet and Air Lease

Assuming the 90 days trading horizon Zimmer Biomet Holdings is expected to under-perform the Air Lease. But the stock apears to be less risky and, when comparing its historical volatility, Zimmer Biomet Holdings is 1.23 times less risky than Air Lease. The stock trades about -0.01 of its potential returns per unit of risk. The Air Lease is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,607  in Air Lease on October 24, 2024 and sell it today you would earn a total of  893.00  from holding Air Lease or generate 24.76% return on investment over 90 days.

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

Zimmer Biomet Holdings  vs.  Air Lease

Zimmer Biomet Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Zimmer Biomet Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Zimmer Biomet may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 nearly fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Zimmer Biomet and Air Lease

The main advantage of trading using opposite Zimmer Biomet and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zimmer Biomet 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 Zimmer Biomet Holdings 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 Stocks Directory module to find actively traded stocks across global markets.