Correlation Between Cars and Air Lease
Can any of the company-specific risk be diversified away by investing in both Cars and Air Lease 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 Cars and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and Air Lease, you can compare the effects of market volatilities on Cars and Air Lease 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 Cars with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and Air Lease.
Diversification Opportunities for Cars and Air Lease
Poor diversification
The 3 months correlation between Cars and Air is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Cars 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 Cars Inc are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of Cars i.e., Cars and Air Lease go up and down completely randomly.
Pair Corralation between Cars and Air Lease
Assuming the 90 days horizon Cars is expected to generate 1.67 times less return on investment than Air Lease. In addition to that, Cars is 1.44 times more volatile than Air Lease. It trades about 0.07 of its total potential returns per unit of risk. Air Lease is currently generating about 0.18 per unit of volatility. If you would invest 4,038 in Air Lease on August 28, 2024 and sell it today you would earn a total of 802.00 from holding Air Lease or generate 19.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cars Inc vs. Air Lease
Performance |
| Timeline |
| Cars Inc |
| Air Lease |
Cars and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and Air Lease
The main advantage of trading using opposite Cars and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, Air Lease 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 Air Lease will offset losses from the drop in Air Lease's long position.| Cars vs. Superior Plus Corp | Cars vs. NMI Holdings | Cars vs. Origin Agritech | Cars vs. SIVERS SEMICONDUCTORS AB |
| Air Lease vs. SENECA FOODS A | Air Lease vs. TreeHouse Foods | Air Lease vs. Transportadora de Gas | Air Lease vs. BII Railway Transportation |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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