Correlation Between Air Lease and Origin Energy
Can any of the company-specific risk be diversified away by investing in both Air Lease and Origin Energy 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 Origin Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Origin Energy Limited, you can compare the effects of market volatilities on Air Lease and Origin Energy 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 Origin Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Origin Energy.
Diversification Opportunities for Air Lease and Origin Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Air and Origin is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Origin Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Origin Energy Limited 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 Origin Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Origin Energy Limited has no effect on the direction of Air Lease i.e., Air Lease and Origin Energy go up and down completely randomly.
Pair Corralation between Air Lease and Origin Energy
Assuming the 90 days trading horizon Air Lease is expected to generate 1.72 times more return on investment than Origin Energy. However, Air Lease is 1.72 times more volatile than Origin Energy Limited. It trades about 0.37 of its potential returns per unit of risk. Origin Energy Limited is currently generating about 0.49 per unit of risk. If you would invest 4,060 in Air Lease on September 3, 2024 and sell it today you would earn a total of 700.00 from holding Air Lease or generate 17.24% 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. Origin Energy Limited
Performance |
| Timeline |
| Air Lease |
| Origin Energy Limited |
Air Lease and Origin Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Origin Energy
The main advantage of trading using opposite Air Lease and Origin Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Origin Energy 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 Origin Energy will offset losses from the drop in Origin Energy's long position.| Air Lease vs. Air Transport Services | Air Lease vs. VIRGIN WINES UK | Air Lease vs. TEXAS ROADHOUSE | Air Lease vs. Broadcom |
| Origin Energy vs. DFS Furniture PLC | Origin Energy vs. LGI Homes | Origin Energy vs. Autohome ADR | Origin Energy vs. MAVEN WIRELESS SWEDEN |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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