Correlation Between Air Lease and Life Time
Can any of the company-specific risk be diversified away by investing in both Air Lease and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Life Time Group, you can compare the effects of market volatilities on Air Lease and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Life Time.
Diversification Opportunities for Air Lease and Life Time
Significant diversification
The 3 months correlation between Air and Life is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Air Lease i.e., Air Lease and Life Time go up and down completely randomly.
Pair Corralation between Air Lease and Life Time
Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.84 times less return on investment than Life Time. But when comparing it to its historical volatility, Air Lease is 1.29 times less risky than Life Time. It trades about 0.07 of its potential returns per unit of risk. Life Time Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,443 in Life Time Group on September 2, 2024 and sell it today you would earn a total of 984.00 from holding Life Time Group or generate 68.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Life Time Group
Performance |
| Timeline |
| Air Lease |
| Life Time Group |
Air Lease and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Life Time
The main advantage of trading using opposite Air Lease and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time'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 |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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