Correlation Between Air Lease and Woolworths Group
Can any of the company-specific risk be diversified away by investing in both Air Lease and Woolworths Group 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 Woolworths Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Woolworths Group Limited, you can compare the effects of market volatilities on Air Lease and Woolworths Group 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 Woolworths Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Woolworths Group.
Diversification Opportunities for Air Lease and Woolworths Group
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Air and Woolworths is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Woolworths Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woolworths Group 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 Woolworths Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woolworths Group has no effect on the direction of Air Lease i.e., Air Lease and Woolworths Group go up and down completely randomly.
Pair Corralation between Air Lease and Woolworths Group
Assuming the 90 days trading horizon Air Lease is expected to generate 1.44 times more return on investment than Woolworths Group. However, Air Lease is 1.44 times more volatile than Woolworths Group Limited. It trades about 0.03 of its potential returns per unit of risk. Woolworths Group Limited is currently generating about -0.02 per unit of risk. If you would invest 3,892 in Air Lease on September 1, 2024 and sell it today you would earn a total of 868.00 from holding Air Lease or generate 22.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.78% |
| Values | Daily Returns |
Air Lease vs. Woolworths Group Limited
Performance |
| Timeline |
| Air Lease |
| Woolworths Group |
Air Lease and Woolworths Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Lease and Woolworths Group
The main advantage of trading using opposite Air Lease and Woolworths Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Woolworths Group 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 Woolworths Group will offset losses from the drop in Woolworths Group's long position.| Air Lease vs. Caseys General Stores | Air Lease vs. Ping An Insurance | Air Lease vs. Selective Insurance Group | Air Lease vs. The Hanover Insurance |
| Woolworths Group vs. EIDESVIK OFFSHORE NK | Woolworths Group vs. AM EAGLE OUTFITTERS | Woolworths Group vs. SCANDMEDICAL SOLDK 040 | Woolworths Group vs. Avanos Medical |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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