Correlation Between Air Lease and RJK Explorations
Can any of the company-specific risk be diversified away by investing in both Air Lease and RJK Explorations 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 RJK Explorations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and RJK Explorations, you can compare the effects of market volatilities on Air Lease and RJK Explorations 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 RJK Explorations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and RJK Explorations.
Diversification Opportunities for Air Lease and RJK Explorations
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and RJK is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and RJK Explorations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RJK Explorations 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 RJK Explorations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RJK Explorations has no effect on the direction of Air Lease i.e., Air Lease and RJK Explorations go up and down completely randomly.
Pair Corralation between Air Lease and RJK Explorations
Allowing for the 90-day total investment horizon Air Lease is expected to generate 31.4 times less return on investment than RJK Explorations. But when comparing it to its historical volatility, Air Lease is 11.04 times less risky than RJK Explorations. It trades about 0.04 of its potential returns per unit of risk. RJK Explorations is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2.00 in RJK Explorations on September 1, 2024 and sell it today you would earn a total of 3.00 from holding RJK Explorations or generate 150.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Air Lease vs. RJK Explorations
Performance |
| Timeline |
| Air Lease |
| RJK Explorations |
Air Lease and RJK Explorations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and RJK Explorations
The main advantage of trading using opposite Air Lease and RJK Explorations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, RJK Explorations 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 RJK Explorations will offset losses from the drop in RJK Explorations' long position.| Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. PROG Holdings | Air Lease vs. Custom Truck One |
| RJK Explorations vs. Haverty Furniture Companies | RJK Explorations vs. KNOT Offshore Partners | RJK Explorations vs. Franklin Street Properties | RJK Explorations vs. Boot Barn Holdings |
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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