Correlation Between Air Lease and United Parks
Can any of the company-specific risk be diversified away by investing in both Air Lease and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and United Parks Resorts, you can compare the effects of market volatilities on Air Lease and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and United Parks.
Diversification Opportunities for Air Lease and United Parks
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and United is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of Air Lease i.e., Air Lease and United Parks go up and down completely randomly.
Pair Corralation between Air Lease and United Parks
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.73 times more return on investment than United Parks. However, Air Lease is 1.37 times less risky than United Parks. It trades about 0.38 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.17 per unit of risk. If you would invest 4,396 in Air Lease on August 24, 2024 and sell it today you would earn a total of 668.00 from holding Air Lease or generate 15.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. United Parks Resorts
Performance |
| Timeline |
| Air Lease |
| United Parks Resorts |
Air Lease and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and United Parks
The main advantage of trading using opposite Air Lease and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
| United Parks vs. Vera Bradley | United Parks vs. Under Armour C | United Parks vs. Lakeland Industries | United Parks vs. Air Lease |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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