Correlation Between Air Lease and Fevertree Drinks
Can any of the company-specific risk be diversified away by investing in both Air Lease and Fevertree Drinks 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 Fevertree Drinks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Fevertree Drinks Plc, you can compare the effects of market volatilities on Air Lease and Fevertree Drinks 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 Fevertree Drinks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Fevertree Drinks.
Diversification Opportunities for Air Lease and Fevertree Drinks
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and Fevertree is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Fevertree Drinks Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fevertree Drinks 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 Fevertree Drinks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fevertree Drinks Plc has no effect on the direction of Air Lease i.e., Air Lease and Fevertree Drinks go up and down completely randomly.
Pair Corralation between Air Lease and Fevertree Drinks
Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.99 times more return on investment than Fevertree Drinks. However, Air Lease is 1.99 times more volatile than Fevertree Drinks Plc. It trades about 0.38 of its potential returns per unit of risk. Fevertree Drinks Plc is currently generating about -0.52 per unit of risk. If you would invest 4,497 in Air Lease on August 28, 2024 and sell it today you would earn a total of 719.00 from holding Air Lease or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Fevertree Drinks Plc
Performance |
| Timeline |
| Air Lease |
| Fevertree Drinks Plc |
Air Lease and Fevertree Drinks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Fevertree Drinks
The main advantage of trading using opposite Air Lease and Fevertree Drinks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Fevertree Drinks 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 Fevertree Drinks will offset losses from the drop in Fevertree Drinks' long position.| Air Lease vs. PROG Holdings | Air Lease vs. McGrath RentCorp | Air Lease vs. Mega Matrix Corp | Air Lease vs. FTAI Aviation Ltd |
| Fevertree Drinks vs. National Beverage Corp | Fevertree Drinks vs. Vita Coco | Fevertree Drinks vs. Hill Street Beverage | Fevertree Drinks vs. Alkame Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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