Correlation Between Air Lease and AMP
Can any of the company-specific risk be diversified away by investing in both Air Lease and AMP 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 AMP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and AMP, you can compare the effects of market volatilities on Air Lease and AMP 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 AMP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and AMP.
Diversification Opportunities for Air Lease and AMP
Very poor diversification
The 3 months correlation between Air and AMP is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and AMP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMP 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 AMP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMP has no effect on the direction of Air Lease i.e., Air Lease and AMP go up and down completely randomly.
Pair Corralation between Air Lease and AMP
Assuming the 90 days trading horizon Air Lease is expected to generate 0.74 times more return on investment than AMP. However, Air Lease is 1.36 times less risky than AMP. It trades about 0.05 of its potential returns per unit of risk. AMP is currently generating about 0.03 per unit of risk. If you would invest 3,430 in Air Lease on September 14, 2024 and sell it today you would earn a total of 1,290 from holding Air Lease or generate 37.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Air Lease vs. AMP
Performance |
| Timeline |
| Air Lease |
| AMP |
Air Lease and AMP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and AMP
The main advantage of trading using opposite Air Lease and AMP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, AMP 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 AMP will offset losses from the drop in AMP's long position.| Air Lease vs. United Rentals | Air Lease vs. Superior Plus Corp | Air Lease vs. SIVERS SEMICONDUCTORS AB | Air Lease vs. Norsk Hydro ASA |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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