Correlation Between HE Equipment and Air Lease
Can any of the company-specific risk be diversified away by investing in both HE Equipment 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 HE Equipment and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HE Equipment Services and Air Lease, you can compare the effects of market volatilities on HE Equipment 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 HE Equipment with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of HE Equipment and Air Lease.
Diversification Opportunities for HE Equipment and Air Lease
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between HEES and Air is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding HE Equipment Services and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and HE Equipment 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 HE Equipment Services 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 HE Equipment i.e., HE Equipment and Air Lease go up and down completely randomly.
Pair Corralation between HE Equipment and Air Lease
Given the investment horizon of 90 days HE Equipment Services is expected to generate 1.61 times more return on investment than Air Lease. However, HE Equipment is 1.61 times more volatile than Air Lease. It trades about 0.13 of its potential returns per unit of risk. Air Lease is currently generating about 0.1 per unit of risk. If you would invest 4,844 in HE Equipment Services on August 26, 2024 and sell it today you would earn a total of 1,032 from holding HE Equipment Services or generate 21.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HE Equipment Services vs. Air Lease
Performance |
| Timeline |
| HE Equipment Services |
| Air Lease |
HE Equipment and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HE Equipment and Air Lease
The main advantage of trading using opposite HE Equipment and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HE Equipment 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.| HE Equipment vs. PROG Holdings | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Mega Matrix Corp | HE Equipment vs. FTAI Aviation Ltd |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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