Correlation Between Air Lease and WK Kellogg
Can any of the company-specific risk be diversified away by investing in both Air Lease and WK Kellogg 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 WK Kellogg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and WK Kellogg Co, you can compare the effects of market volatilities on Air Lease and WK Kellogg 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 WK Kellogg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and WK Kellogg.
Diversification Opportunities for Air Lease and WK Kellogg
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and KLG is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and WK Kellogg Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WK Kellogg 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 WK Kellogg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WK Kellogg has no effect on the direction of Air Lease i.e., Air Lease and WK Kellogg go up and down completely randomly.
Pair Corralation between Air Lease and WK Kellogg
Allowing for the 90-day total investment horizon Air Lease is expected to generate 2.88 times less return on investment than WK Kellogg. But when comparing it to its historical volatility, Air Lease is 1.48 times less risky than WK Kellogg. It trades about 0.03 of its potential returns per unit of risk. WK Kellogg Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,198 in WK Kellogg Co on November 3, 2024 and sell it today you would earn a total of 461.00 from holding WK Kellogg Co or generate 38.48% 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. WK Kellogg Co
Performance |
| Timeline |
| Air Lease |
| WK Kellogg |
Air Lease and WK Kellogg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and WK Kellogg
The main advantage of trading using opposite Air Lease and WK Kellogg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, WK Kellogg 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 WK Kellogg will offset losses from the drop in WK Kellogg'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 |
| WK Kellogg vs. PACCAR Inc | WK Kellogg vs. Universal Music Group | WK Kellogg vs. Genuine Parts Co | WK Kellogg vs. Warner Music Group |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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