Correlation Between Playmates Toys and Air Lease
Can any of the company-specific risk be diversified away by investing in both Playmates Toys 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 Playmates Toys and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Playmates Toys Limited and Air Lease, you can compare the effects of market volatilities on Playmates Toys 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 Playmates Toys with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Playmates Toys and Air Lease.
Diversification Opportunities for Playmates Toys and Air Lease
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Playmates and Air is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Playmates Toys Limited and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Playmates Toys 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 Playmates Toys Limited 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 Playmates Toys i.e., Playmates Toys and Air Lease go up and down completely randomly.
Pair Corralation between Playmates Toys and Air Lease
Assuming the 90 days horizon Playmates Toys Limited is expected to generate 2.64 times more return on investment than Air Lease. However, Playmates Toys is 2.64 times more volatile than Air Lease. It trades about -0.05 of its potential returns per unit of risk. Air Lease is currently generating about -0.17 per unit of risk. If you would invest 6.60 in Playmates Toys Limited on October 12, 2024 and sell it today you would lose (0.20) from holding Playmates Toys Limited or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Playmates Toys Limited vs. Air Lease
Performance |
| Timeline |
| Playmates Toys |
| Air Lease |
Playmates Toys and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Playmates Toys and Air Lease
The main advantage of trading using opposite Playmates Toys and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playmates Toys 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.| Playmates Toys vs. Jacquet Metal Service | Playmates Toys vs. Western Copper and | Playmates Toys vs. Diamyd Medical AB | Playmates Toys vs. Perseus Mining Limited |
| Air Lease vs. GRIFFIN MINING LTD | Air Lease vs. Playa Hotels Resorts | Air Lease vs. COLUMBIA SPORTSWEAR | Air Lease vs. Playmates Toys Limited |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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