Correlation Between Air Lease and Adient PLC
Can any of the company-specific risk be diversified away by investing in both Air Lease and Adient PLC 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 Air Lease and Adient PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Adient PLC, you can compare the effects of market volatilities on Air Lease and Adient PLC 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 Air Lease with a short position of Adient PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Adient PLC.
Diversification Opportunities for Air Lease and Adient PLC
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Adient is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Adient PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Adient PLC and Air Lease 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 Air Lease are associated (or correlated) with Adient PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Adient PLC has no effect on the direction of Air Lease i.e., Air Lease and Adient PLC go up and down completely randomly.
Pair Corralation between Air Lease and Adient PLC
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.8 times more return on investment than Adient PLC. However, Air Lease is 1.25 times less risky than Adient PLC. It trades about 0.04 of its potential returns per unit of risk. Adient PLC is currently generating about -0.07 per unit of risk. If you would invest 4,133 in Air Lease on September 2, 2024 and sell it today you would earn a total of 957.00 from holding Air Lease or generate 23.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Adient PLC
Performance |
| Timeline |
| Air Lease |
| Adient PLC |
Air Lease and Adient PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Adient PLC
The main advantage of trading using opposite Air Lease and Adient PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Adient PLC 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 Adient PLC will offset losses from the drop in Adient PLC's long position.| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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