Correlation Between Fortress Transportation and Air Lease
Can any of the company-specific risk be diversified away by investing in both Fortress Transportation 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 Fortress Transportation and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Transportation and and Air Lease, you can compare the effects of market volatilities on Fortress Transportation 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 Fortress Transportation with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Transportation and Air Lease.
Diversification Opportunities for Fortress Transportation and Air Lease
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fortress and Air is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Transportation and and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Fortress Transportation 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 Fortress Transportation and 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 Fortress Transportation i.e., Fortress Transportation and Air Lease go up and down completely randomly.
Pair Corralation between Fortress Transportation and Air Lease
Assuming the 90 days horizon Fortress Transportation is expected to generate 2.93 times less return on investment than Air Lease. But when comparing it to its historical volatility, Fortress Transportation and is 5.05 times less risky than Air Lease. It trades about 0.14 of its potential returns per unit of risk. Air Lease is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 4,803 in Air Lease on September 18, 2024 and sell it today you would earn a total of 105.00 from holding Air Lease or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Transportation and vs. Air Lease
Performance |
| Timeline |
| Fortress Transportation |
| Air Lease |
Fortress Transportation and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Transportation and Air Lease
The main advantage of trading using opposite Fortress Transportation and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Transportation 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.The idea behind Fortress Transportation and and Air Lease pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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