Correlation Between Air Lease and Nippon Steel
Can any of the company-specific risk be diversified away by investing in both Air Lease and Nippon Steel 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 Nippon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Nippon Steel, you can compare the effects of market volatilities on Air Lease and Nippon Steel 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 Nippon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Nippon Steel.
Diversification Opportunities for Air Lease and Nippon Steel
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Air and Nippon is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Nippon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Steel 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 Nippon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Steel has no effect on the direction of Air Lease i.e., Air Lease and Nippon Steel go up and down completely randomly.
Pair Corralation between Air Lease and Nippon Steel
Assuming the 90 days trading horizon Air Lease is expected to generate 1.03 times more return on investment than Nippon Steel. However, Air Lease is 1.03 times more volatile than Nippon Steel. It trades about -0.21 of its potential returns per unit of risk. Nippon Steel is currently generating about -0.23 per unit of risk. If you would invest 4,917 in Air Lease on September 25, 2024 and sell it today you would lose (277.00) from holding Air Lease or give up 5.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Lease vs. Nippon Steel
Performance |
| Timeline |
| Air Lease |
| Nippon Steel |
Air Lease and Nippon Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Nippon Steel
The main advantage of trading using opposite Air Lease and Nippon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Nippon Steel 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 Nippon Steel will offset losses from the drop in Nippon Steel's long position.| Air Lease vs. Ashtead Group plc | Air Lease vs. WillScot Mobile Mini | Air Lease vs. Avis Budget Group | Air Lease vs. Sixt SE |
| Nippon Steel vs. Apple Inc | Nippon Steel vs. Apple Inc | Nippon Steel vs. Apple Inc | Nippon Steel vs. Microsoft |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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