Correlation Between Air Lease and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Air Lease and Australian Agricultural 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 Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Australian Agricultural, you can compare the effects of market volatilities on Air Lease and Australian Agricultural 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 Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Australian Agricultural.
Diversification Opportunities for Air Lease and Australian Agricultural
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Australian is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural 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 Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Air Lease i.e., Air Lease and Australian Agricultural go up and down completely randomly.
Pair Corralation between Air Lease and Australian Agricultural
Assuming the 90 days trading horizon Air Lease is expected to generate 0.88 times more return on investment than Australian Agricultural. However, Air Lease is 1.14 times less risky than Australian Agricultural. It trades about 0.05 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 3,314 in Air Lease on September 12, 2024 and sell it today you would earn a total of 1,426 from holding Air Lease or generate 43.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Australian Agricultural
Performance |
| Timeline |
| Air Lease |
| Australian Agricultural |
Air Lease and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Australian Agricultural
The main advantage of trading using opposite Air Lease and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| Air Lease vs. United Rentals | Air Lease vs. WillScot Mobile Mini | Air Lease vs. Superior Plus Corp | Air Lease vs. SIVERS SEMICONDUCTORS AB |
| Australian Agricultural vs. Marie Brizard Wine | Australian Agricultural vs. Natural Health Trends | Australian Agricultural vs. Sixt Leasing SE | Australian Agricultural vs. Air Lease |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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