Correlation Between CAP LEASE and NOW
Can any of the company-specific risk be diversified away by investing in both CAP LEASE and NOW 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 CAP LEASE and NOW into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAP LEASE AVIATION and NOW Inc, you can compare the effects of market volatilities on CAP LEASE and NOW 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 CAP LEASE with a short position of NOW. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAP LEASE and NOW.
Diversification Opportunities for CAP LEASE and NOW
Excellent diversification
The 3 months correlation between CAP and NOW is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CAP LEASE AVIATION and NOW Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NOW Inc and CAP 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 CAP LEASE AVIATION are associated (or correlated) with NOW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NOW Inc has no effect on the direction of CAP LEASE i.e., CAP LEASE and NOW go up and down completely randomly.
Pair Corralation between CAP LEASE and NOW
Assuming the 90 days trading horizon CAP LEASE AVIATION is expected to under-perform the NOW. In addition to that, CAP LEASE is 1.2 times more volatile than NOW Inc. It trades about -0.03 of its total potential returns per unit of risk. NOW Inc is currently generating about 0.03 per unit of volatility. If you would invest 1,249 in NOW Inc on September 14, 2024 and sell it today you would earn a total of 211.00 from holding NOW Inc or generate 16.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.94% |
| Values | Daily Returns |
CAP LEASE AVIATION vs. NOW Inc
Performance |
| Timeline |
| CAP LEASE AVIATION |
| NOW Inc |
CAP LEASE and NOW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CAP LEASE and NOW
The main advantage of trading using opposite CAP LEASE and NOW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAP LEASE position performs unexpectedly, NOW 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 NOW will offset losses from the drop in NOW's long position.| CAP LEASE vs. Givaudan SA | CAP LEASE vs. Antofagasta PLC | CAP LEASE vs. Ferrexpo PLC | CAP LEASE vs. Atalaya Mining |
| NOW vs. Polar Capital Technology | NOW vs. GreenX Metals | NOW vs. CAP LEASE AVIATION | NOW vs. Silvercorp Metals |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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