Correlation Between Air Lease and Titan Machinery
Can any of the company-specific risk be diversified away by investing in both Air Lease and Titan Machinery 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 Titan Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Titan Machinery, you can compare the effects of market volatilities on Air Lease and Titan Machinery 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 Titan Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Titan Machinery.
Diversification Opportunities for Air Lease and Titan Machinery
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Titan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Titan Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Titan Machinery 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 Titan Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Titan Machinery has no effect on the direction of Air Lease i.e., Air Lease and Titan Machinery go up and down completely randomly.
Pair Corralation between Air Lease and Titan Machinery
Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.68 times more return on investment than Titan Machinery. However, Air Lease is 1.46 times less risky than Titan Machinery. It trades about 0.07 of its potential returns per unit of risk. Titan Machinery is currently generating about -0.06 per unit of risk. If you would invest 3,860 in Air Lease on September 2, 2024 and sell it today you would earn a total of 1,230 from holding Air Lease or generate 31.87% 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. Titan Machinery
Performance |
| Timeline |
| Air Lease |
| Titan Machinery |
Air Lease and Titan Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Titan Machinery
The main advantage of trading using opposite Air Lease and Titan Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Titan Machinery 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 Titan Machinery will offset losses from the drop in Titan Machinery'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 |
| Titan Machinery vs. Oil States International | Titan Machinery vs. Oceaneering International | Titan Machinery vs. Geospace Technologies | Titan Machinery vs. Newpark Resources |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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