Correlation Between Air Lease and Block
Can any of the company-specific risk be diversified away by investing in both Air Lease and Block 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 Block into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Block Inc, you can compare the effects of market volatilities on Air Lease and Block 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 Block. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Block.
Diversification Opportunities for Air Lease and Block
Very poor diversification
The 3 months correlation between Air and Block is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Block Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Block Inc 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 Block. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Block Inc has no effect on the direction of Air Lease i.e., Air Lease and Block go up and down completely randomly.
Pair Corralation between Air Lease and Block
Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.95 times less return on investment than Block. But when comparing it to its historical volatility, Air Lease is 2.2 times less risky than Block. It trades about 0.34 of its potential returns per unit of risk. Block Inc is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 7,261 in Block Inc on August 26, 2024 and sell it today you would earn a total of 1,965 from holding Block Inc or generate 27.06% 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. Block Inc
Performance |
| Timeline |
| Air Lease |
| Block Inc |
Air Lease and Block Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Block
The main advantage of trading using opposite Air Lease and Block positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Block 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 Block will offset losses from the drop in Block'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 |
| Block vs. Oneconnect Financial Technology | Block vs. Global Business Travel | Block vs. Alight Inc | Block vs. CS Disco LLC |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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