Correlation Between Global Ship and Air Lease
Can any of the company-specific risk be diversified away by investing in both Global Ship 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 Global Ship and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Air Lease, you can compare the effects of market volatilities on Global Ship 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 Global Ship with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Air Lease.
Diversification Opportunities for Global Ship and Air Lease
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Air is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Global Ship 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 Global Ship Lease 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 Global Ship i.e., Global Ship and Air Lease go up and down completely randomly.
Pair Corralation between Global Ship and Air Lease
Assuming the 90 days horizon Global Ship Lease is expected to under-perform the Air Lease. But the stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 1.08 times less risky than Air Lease. The stock trades about -0.04 of its potential returns per unit of risk. The Air Lease is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,120 in Air Lease on August 28, 2024 and sell it today you would earn a total of 720.00 from holding Air Lease or generate 17.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Air Lease
Performance |
| Timeline |
| Global Ship Lease |
| Air Lease |
Global Ship and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Air Lease
The main advantage of trading using opposite Global Ship and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship 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.| Global Ship vs. COSTCO WHOLESALE CDR | Global Ship vs. WisdomTree Investments | Global Ship vs. Apollo Investment Corp | Global Ship vs. Retail Estates NV |
| Air Lease vs. SENECA FOODS A | Air Lease vs. TreeHouse Foods | Air Lease vs. Transportadora de Gas | Air Lease vs. BII Railway Transportation |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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