Correlation Between Alvotech and Air Lease
Can any of the company-specific risk be diversified away by investing in both Alvotech and Air Lease 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 Alvotech and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alvotech and Air Lease, you can compare the effects of market volatilities on Alvotech and Air Lease 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 Alvotech with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alvotech and Air Lease.
Diversification Opportunities for Alvotech and Air Lease
Average diversification
The 3 months correlation between Alvotech and Air is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Alvotech and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Alvotech 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 Alvotech are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Alvotech i.e., Alvotech and Air Lease go up and down completely randomly.
Pair Corralation between Alvotech and Air Lease
Given the investment horizon of 90 days Alvotech is expected to under-perform the Air Lease. But the stock apears to be less risky and, when comparing its historical volatility, Alvotech is 1.01 times less risky than Air Lease. The stock trades about -0.2 of its potential returns per unit of risk. The Air Lease is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 4,497 in Air Lease on August 28, 2024 and sell it today you would earn a total of 719.00 from holding Air Lease or generate 15.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alvotech vs. Air Lease
Performance |
| Timeline |
| Alvotech |
| Air Lease |
Alvotech and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alvotech and Air Lease
The main advantage of trading using opposite Alvotech and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alvotech position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Alvotech vs. Intracellular Th | Alvotech vs. Catalent | Alvotech vs. Amphastar P | Alvotech vs. Assertio Therapeutics |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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