Correlation Between Air Lease and Cal Maine
Can any of the company-specific risk be diversified away by investing in both Air Lease and Cal Maine 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 Cal Maine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Cal Maine Foods, you can compare the effects of market volatilities on Air Lease and Cal Maine 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 Cal Maine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Cal Maine.
Diversification Opportunities for Air Lease and Cal Maine
Poor diversification
The 3 months correlation between Air and Cal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Cal Maine Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cal Maine Foods 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 Cal Maine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cal Maine Foods has no effect on the direction of Air Lease i.e., Air Lease and Cal Maine go up and down completely randomly.
Pair Corralation between Air Lease and Cal Maine
Assuming the 90 days trading horizon Air Lease is expected to generate 16.94 times less return on investment than Cal Maine. But when comparing it to its historical volatility, Air Lease is 1.49 times less risky than Cal Maine. It trades about 0.02 of its potential returns per unit of risk. Cal Maine Foods is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 8,928 in Cal Maine Foods on September 21, 2024 and sell it today you would earn a total of 1,152 from holding Cal Maine Foods or generate 12.9% 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. Cal Maine Foods
Performance |
| Timeline |
| Air Lease |
| Cal Maine Foods |
Air Lease and Cal Maine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Cal Maine
The main advantage of trading using opposite Air Lease and Cal Maine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Cal Maine 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 Cal Maine will offset losses from the drop in Cal Maine's long position.| Air Lease vs. CAREER EDUCATION | Air Lease vs. Strategic Education | Air Lease vs. TERADATA | Air Lease vs. Grand Canyon Education |
| Cal Maine vs. WisdomTree Investments | Cal Maine vs. Lion One Metals | Cal Maine vs. DISTRICT METALS | Cal Maine vs. Gladstone Investment |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |