Correlation Between Air Lease and GreenPower
Can any of the company-specific risk be diversified away by investing in both Air Lease and GreenPower 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 GreenPower into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and GreenPower Motor, you can compare the effects of market volatilities on Air Lease and GreenPower 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 GreenPower. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and GreenPower.
Diversification Opportunities for Air Lease and GreenPower
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Air and GreenPower is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and GreenPower Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenPower Motor 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 GreenPower. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenPower Motor has no effect on the direction of Air Lease i.e., Air Lease and GreenPower go up and down completely randomly.
Pair Corralation between Air Lease and GreenPower
Allowing for the 90-day total investment horizon Air Lease is expected to under-perform the GreenPower. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 5.12 times less risky than GreenPower. The stock trades about -0.13 of its potential returns per unit of risk. The GreenPower Motor is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 72.00 in GreenPower Motor on October 24, 2024 and sell it today you would earn a total of 9.00 from holding GreenPower Motor or generate 12.5% 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. GreenPower Motor
Performance |
| Timeline |
| Air Lease |
| GreenPower Motor |
Air Lease and GreenPower Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and GreenPower
The main advantage of trading using opposite Air Lease and GreenPower positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, GreenPower 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 GreenPower will offset losses from the drop in GreenPower'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 |
| GreenPower vs. AGCO Corporation | GreenPower vs. Nikola Corp | GreenPower vs. PACCAR Inc | GreenPower vs. Deere Company |
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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