Correlation Between Air Lease and Air New
Can any of the company-specific risk be diversified away by investing in both Air Lease and Air New 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 Air New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Air New Zealand, you can compare the effects of market volatilities on Air Lease and Air New 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 Air New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Air New.
Diversification Opportunities for Air Lease and Air New
Weak diversification
The 3 months correlation between Air and Air is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Air New Zealand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air New Zealand 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 Air New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air New Zealand has no effect on the direction of Air Lease i.e., Air Lease and Air New go up and down completely randomly.
Pair Corralation between Air Lease and Air New
Assuming the 90 days trading horizon Air Lease is expected to under-perform the Air New. But the stock apears to be less risky and, when comparing its historical volatility, Air Lease is 1.28 times less risky than Air New. The stock trades about -0.19 of its potential returns per unit of risk. The Air New Zealand is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 33.00 in Air New Zealand on November 1, 2024 and sell it today you would earn a total of 1.00 from holding Air New Zealand or generate 3.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Air New Zealand
Performance |
| Timeline |
| Air Lease |
| Air New Zealand |
Air Lease and Air New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Air New
The main advantage of trading using opposite Air Lease and Air New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Air New 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 New will offset losses from the drop in Air New's long position.| Air Lease vs. Perdoceo Education | Air Lease vs. Performance Food Group | Air Lease vs. Adtalem Global Education | Air Lease vs. EEDUCATION ALBERT AB |
| Air New vs. INFORMATION SVC GRP | Air New vs. Teradata Corp | Air New vs. Corporate Office Properties | Air New vs. Northern Data AG |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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