Correlation Between Air Lease and General Mills
Can any of the company-specific risk be diversified away by investing in both Air Lease and General Mills 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 General Mills into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and General Mills, you can compare the effects of market volatilities on Air Lease and General Mills 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 General Mills. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and General Mills.
Diversification Opportunities for Air Lease and General Mills
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Air and General is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and General Mills in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Mills 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 General Mills. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Mills has no effect on the direction of Air Lease i.e., Air Lease and General Mills go up and down completely randomly.
Pair Corralation between Air Lease and General Mills
Assuming the 90 days trading horizon Air Lease is expected to generate 1.23 times less return on investment than General Mills. But when comparing it to its historical volatility, Air Lease is 1.0 times less risky than General Mills. It trades about 0.06 of its potential returns per unit of risk. General Mills is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 8,678 in General Mills on September 14, 2024 and sell it today you would earn a total of 189.00 from holding General Mills or generate 2.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. General Mills
Performance |
| Timeline |
| Air Lease |
| General Mills |
Air Lease and General Mills Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and General Mills
The main advantage of trading using opposite Air Lease and General Mills positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, General Mills 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 General Mills will offset losses from the drop in General Mills' 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 |
| General Mills vs. Gaztransport Technigaz SA | General Mills vs. Air Lease | General Mills vs. TEXAS ROADHOUSE | General Mills vs. ALBIS LEASING 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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