Correlation Between Investment and CAP LEASE
Can any of the company-specific risk be diversified away by investing in both Investment and CAP 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 Investment and CAP LEASE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Investment and CAP LEASE AVIATION, you can compare the effects of market volatilities on Investment and CAP 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 Investment with a short position of CAP LEASE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and CAP LEASE.
Diversification Opportunities for Investment and CAP LEASE
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Investment and CAP is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding The Investment and CAP LEASE AVIATION in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CAP LEASE AVIATION and Investment 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 The Investment are associated (or correlated) with CAP LEASE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CAP LEASE AVIATION has no effect on the direction of Investment i.e., Investment and CAP LEASE go up and down completely randomly.
Pair Corralation between Investment and CAP LEASE
Assuming the 90 days trading horizon The Investment is expected to generate 0.03 times more return on investment than CAP LEASE. However, The Investment is 37.3 times less risky than CAP LEASE. It trades about 0.22 of its potential returns per unit of risk. CAP LEASE AVIATION is currently generating about -0.2 per unit of risk. If you would invest 37,500 in The Investment on September 4, 2024 and sell it today you would earn a total of 100.00 from holding The Investment or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
The Investment vs. CAP LEASE AVIATION
Performance |
| Timeline |
| Investment |
| CAP LEASE AVIATION |
Investment and CAP LEASE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and CAP LEASE
The main advantage of trading using opposite Investment and CAP LEASE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, CAP 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 CAP LEASE will offset losses from the drop in CAP LEASE's long position.| Investment vs. Deltex Medical Group | Investment vs. Wyndham Hotels Resorts | Investment vs. InterContinental Hotels Group | Investment vs. United States Steel |
| CAP LEASE vs. Associated British Foods | CAP LEASE vs. Tyson Foods Cl | CAP LEASE vs. Roebuck Food Group | CAP LEASE vs. Various Eateries PLC |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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