Correlation Between Custom Truck and Air Lease
Can any of the company-specific risk be diversified away by investing in both Custom Truck 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 Custom Truck and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Custom Truck One and Air Lease, you can compare the effects of market volatilities on Custom Truck 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 Custom Truck with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Custom Truck and Air Lease.
Diversification Opportunities for Custom Truck and Air Lease
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Custom and Air is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Custom Truck One and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Custom Truck 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 Custom Truck One 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 Custom Truck i.e., Custom Truck and Air Lease go up and down completely randomly.
Pair Corralation between Custom Truck and Air Lease
Given the investment horizon of 90 days Custom Truck One is expected to generate 1.88 times more return on investment than Air Lease. However, Custom Truck is 1.88 times more volatile than Air Lease. It trades about 0.1 of its potential returns per unit of risk. Air Lease is currently generating about -0.11 per unit of risk. If you would invest 484.00 in Custom Truck One on November 3, 2024 and sell it today you would earn a total of 25.00 from holding Custom Truck One or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Custom Truck One vs. Air Lease
Performance |
| Timeline |
| Custom Truck One |
| Air Lease |
Custom Truck and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Custom Truck and Air Lease
The main advantage of trading using opposite Custom Truck and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Custom Truck 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.| Custom Truck vs. PROG Holdings | Custom Truck vs. McGrath RentCorp | Custom Truck vs. HE Equipment Services | Custom Truck vs. GATX Corporation |
| Air Lease vs. Alta Equipment Group | Air Lease vs. McGrath RentCorp | Air Lease vs. Herc Holdings | Air Lease vs. HE Equipment Services |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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