Correlation Between Air Lease and AmTrust Financial
Can any of the company-specific risk be diversified away by investing in both Air Lease and AmTrust Financial 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 AmTrust Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and AmTrust Financial Services, you can compare the effects of market volatilities on Air Lease and AmTrust Financial 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 AmTrust Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and AmTrust Financial.
Diversification Opportunities for Air Lease and AmTrust Financial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and AmTrust is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and AmTrust Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AmTrust Financial 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 AmTrust Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AmTrust Financial has no effect on the direction of Air Lease i.e., Air Lease and AmTrust Financial go up and down completely randomly.
Pair Corralation between Air Lease and AmTrust Financial
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.52 times more return on investment than AmTrust Financial. However, Air Lease is 1.94 times less risky than AmTrust Financial. It trades about 0.12 of its potential returns per unit of risk. AmTrust Financial Services is currently generating about 0.05 per unit of risk. If you would invest 4,834 in Air Lease on September 13, 2024 and sell it today you would earn a total of 177.00 from holding Air Lease or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. AmTrust Financial Services
Performance |
| Timeline |
| Air Lease |
| AmTrust Financial |
Air Lease and AmTrust Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and AmTrust Financial
The main advantage of trading using opposite Air Lease and AmTrust Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, AmTrust Financial 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 AmTrust Financial will offset losses from the drop in AmTrust Financial'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 |
| AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services | AmTrust Financial vs. AmTrust Financial Services |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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