Correlation Between Air Lease and China Natural
Can any of the company-specific risk be diversified away by investing in both Air Lease and China Natural 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 China Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and China Natural Resources, you can compare the effects of market volatilities on Air Lease and China Natural 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 China Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and China Natural.
Diversification Opportunities for Air Lease and China Natural
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Air and China is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and China Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Natural Resources 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 China Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Natural Resources has no effect on the direction of Air Lease i.e., Air Lease and China Natural go up and down completely randomly.
Pair Corralation between Air Lease and China Natural
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.49 times more return on investment than China Natural. However, Air Lease is 2.05 times less risky than China Natural. It trades about 0.14 of its potential returns per unit of risk. China Natural Resources is currently generating about -0.03 per unit of risk. If you would invest 4,518 in Air Lease on December 4, 2024 and sell it today you would earn a total of 274.00 from holding Air Lease or generate 6.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. China Natural Resources
Performance |
| Timeline |
| Air Lease |
| China Natural Resources |
Air Lease and China Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and China Natural
The main advantage of trading using opposite Air Lease and China Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, China Natural 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 China Natural will offset losses from the drop in China Natural'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 |
| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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