Correlation Between Air Lease and ArcBest Corp
Can any of the company-specific risk be diversified away by investing in both Air Lease and ArcBest Corp 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 ArcBest Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and ArcBest Corp, you can compare the effects of market volatilities on Air Lease and ArcBest Corp 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 ArcBest Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and ArcBest Corp.
Diversification Opportunities for Air Lease and ArcBest Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and ArcBest is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and ArcBest Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ArcBest Corp 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 ArcBest Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ArcBest Corp has no effect on the direction of Air Lease i.e., Air Lease and ArcBest Corp go up and down completely randomly.
Pair Corralation between Air Lease and ArcBest Corp
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.41 times more return on investment than ArcBest Corp. However, Air Lease is 2.41 times less risky than ArcBest Corp. It trades about 0.3 of its potential returns per unit of risk. ArcBest Corp is currently generating about 0.11 per unit of risk. If you would invest 4,479 in Air Lease on August 30, 2024 and sell it today you would earn a total of 592.00 from holding Air Lease or generate 13.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Air Lease vs. ArcBest Corp
Performance |
| Timeline |
| Air Lease |
| ArcBest Corp |
Air Lease and ArcBest Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and ArcBest Corp
The main advantage of trading using opposite Air Lease and ArcBest Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, ArcBest Corp 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 ArcBest Corp will offset losses from the drop in ArcBest Corp'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 |
| ArcBest Corp vs. Old Dominion Freight | ArcBest Corp vs. Marten Transport | ArcBest Corp vs. Werner Enterprises | ArcBest Corp vs. Knight 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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