Correlation Between Air Lease and Now
Can any of the company-specific risk be diversified away by investing in both Air Lease and Now 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 Now into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Now Inc, you can compare the effects of market volatilities on Air Lease and Now 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 Now. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Now.
Diversification Opportunities for Air Lease and Now
Very poor diversification
The 3 months correlation between Air and Now is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Now Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Now Inc 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 Now. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Now Inc has no effect on the direction of Air Lease i.e., Air Lease and Now go up and down completely randomly.
Pair Corralation between Air Lease and Now
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.72 times more return on investment than Now. However, Air Lease is 1.38 times less risky than Now. It trades about 0.04 of its potential returns per unit of risk. Now Inc is currently generating about 0.02 per unit of risk. If you would invest 3,758 in Air Lease on August 23, 2024 and sell it today you would earn a total of 1,222 from holding Air Lease or generate 32.52% 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. Now Inc
Performance |
| Timeline |
| Air Lease |
| Now Inc |
Air Lease and Now Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Now
The main advantage of trading using opposite Air Lease and Now positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Now 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 Now will offset losses from the drop in Now'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 |
| Now vs. Oil States International | Now vs. Oceaneering International | Now vs. Geospace Technologies | Now vs. Newpark Resources |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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