Correlation Between Air Lease and Greenfire Resources
Can any of the company-specific risk be diversified away by investing in both Air Lease and Greenfire Resources 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 Greenfire Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Greenfire Resources, you can compare the effects of market volatilities on Air Lease and Greenfire Resources 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 Greenfire Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Greenfire Resources.
Diversification Opportunities for Air Lease and Greenfire Resources
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Air and Greenfire is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Greenfire Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Greenfire 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 Greenfire Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Greenfire Resources has no effect on the direction of Air Lease i.e., Air Lease and Greenfire Resources go up and down completely randomly.
Pair Corralation between Air Lease and Greenfire Resources
Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.2 times more return on investment than Greenfire Resources. However, Air Lease is 1.2 times more volatile than Greenfire Resources. It trades about -0.11 of its potential returns per unit of risk. Greenfire Resources is currently generating about -0.39 per unit of risk. If you would invest 4,796 in Air Lease on November 3, 2024 and sell it today you would lose (176.00) from holding Air Lease or give up 3.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Greenfire Resources
Performance |
| Timeline |
| Air Lease |
| Greenfire Resources |
Air Lease and Greenfire Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Greenfire Resources
The main advantage of trading using opposite Air Lease and Greenfire Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Greenfire Resources 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 Greenfire Resources will offset losses from the drop in Greenfire Resources' long position.| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
| Greenfire Resources vs. Saia Inc | Greenfire Resources vs. Starwin Media Holdings | Greenfire Resources vs. Playtika Holding Corp | Greenfire Resources vs. National CineMedia |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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