Correlation Between Air Lease and Safety Shot
Can any of the company-specific risk be diversified away by investing in both Air Lease and Safety Shot 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 Safety Shot into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Safety Shot, you can compare the effects of market volatilities on Air Lease and Safety Shot 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 Safety Shot. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Safety Shot.
Diversification Opportunities for Air Lease and Safety Shot
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Safety is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Safety Shot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safety Shot 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 Safety Shot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safety Shot has no effect on the direction of Air Lease i.e., Air Lease and Safety Shot go up and down completely randomly.
Pair Corralation between Air Lease and Safety Shot
Allowing for the 90-day total investment horizon Air Lease is expected to generate 4.02 times less return on investment than Safety Shot. But when comparing it to its historical volatility, Air Lease is 4.34 times less risky than Safety Shot. It trades about 0.04 of its potential returns per unit of risk. Safety Shot is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 77.00 in Safety Shot on September 20, 2024 and sell it today you would lose (9.00) from holding Safety Shot or give up 11.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Safety Shot
Performance |
| Timeline |
| Air Lease |
| Safety Shot |
Air Lease and Safety Shot Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Safety Shot
The main advantage of trading using opposite Air Lease and Safety Shot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Safety Shot 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 Safety Shot will offset losses from the drop in Safety Shot's long position.| Air Lease vs. McGrath RentCorp | Air Lease vs. Custom Truck One | Air Lease vs. Alta Equipment Group | Air Lease vs. PROG Holdings |
| Safety Shot vs. Sellas Life Sciences | Safety Shot vs. Apogee Therapeutics, Common | Safety Shot vs. Biglari Holdings | Safety Shot vs. Tarsus Pharmaceuticals |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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