Correlation Between KeyCorp and Air Lease
Can any of the company-specific risk be diversified away by investing in both KeyCorp 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 KeyCorp and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KeyCorp and Air Lease, you can compare the effects of market volatilities on KeyCorp 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 KeyCorp with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of KeyCorp and Air Lease.
Diversification Opportunities for KeyCorp and Air Lease
Very good diversification
The 3 months correlation between KeyCorp and Air is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KeyCorp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and KeyCorp 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 KeyCorp 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 KeyCorp i.e., KeyCorp and Air Lease go up and down completely randomly.
Pair Corralation between KeyCorp and Air Lease
Assuming the 90 days trading horizon KeyCorp is expected to under-perform the Air Lease. But the preferred stock apears to be less risky and, when comparing its historical volatility, KeyCorp is 1.76 times less risky than Air Lease. The preferred stock trades about -0.07 of its potential returns per unit of risk. The Air Lease is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,834 in Air Lease on September 13, 2024 and sell it today you would earn a total of 177.00 from holding Air Lease or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KeyCorp vs. Air Lease
Performance |
| Timeline |
| KeyCorp |
| Air Lease |
KeyCorp and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KeyCorp and Air Lease
The main advantage of trading using opposite KeyCorp and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KeyCorp 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 KeyCorp 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.| 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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