Correlation Between CN MODERN and Air Lease
Can any of the company-specific risk be diversified away by investing in both CN MODERN 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 CN MODERN and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Air Lease, you can compare the effects of market volatilities on CN MODERN 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 CN MODERN with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Air Lease.
Diversification Opportunities for CN MODERN and Air Lease
Weak diversification
The 3 months correlation between 07M and Air is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and Air Lease go up and down completely randomly.
Pair Corralation between CN MODERN and Air Lease
Assuming the 90 days trading horizon CN MODERN is expected to generate 2.55 times less return on investment than Air Lease. In addition to that, CN MODERN is 1.46 times more volatile than Air Lease. It trades about 0.01 of its total potential returns per unit of risk. Air Lease is currently generating about 0.05 per unit of volatility. If you would invest 3,411 in Air Lease on August 29, 2024 and sell it today you would earn a total of 1,529 from holding Air Lease or generate 44.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Air Lease
Performance |
| Timeline |
| CN MODERN DAIRY |
| Air Lease |
CN MODERN and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Air Lease
The main advantage of trading using opposite CN MODERN and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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.| CN MODERN vs. Apple Inc | CN MODERN vs. Apple Inc | CN MODERN vs. Superior Plus Corp | CN MODERN vs. SIVERS SEMICONDUCTORS AB |
| Air Lease vs. Superior Plus Corp | Air Lease vs. SIVERS SEMICONDUCTORS AB | Air Lease vs. Talanx AG | Air Lease vs. 2G ENERGY |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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