Correlation Between McGrath RentCorp and Air Lease
Can any of the company-specific risk be diversified away by investing in both McGrath RentCorp 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 McGrath RentCorp and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between McGrath RentCorp and Air Lease, you can compare the effects of market volatilities on McGrath RentCorp 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 McGrath RentCorp with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of McGrath RentCorp and Air Lease.
Diversification Opportunities for McGrath RentCorp and Air Lease
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between McGrath and Air is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding McGrath RentCorp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and McGrath RentCorp 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 McGrath RentCorp 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 McGrath RentCorp i.e., McGrath RentCorp and Air Lease go up and down completely randomly.
Pair Corralation between McGrath RentCorp and Air Lease
Given the investment horizon of 90 days McGrath RentCorp is expected to generate 0.6 times more return on investment than Air Lease. However, McGrath RentCorp is 1.66 times less risky than Air Lease. It trades about -0.08 of its potential returns per unit of risk. Air Lease is currently generating about -0.07 per unit of risk. If you would invest 10,958 in McGrath RentCorp on January 12, 2025 and sell it today you would lose (523.00) from holding McGrath RentCorp or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
McGrath RentCorp vs. Air Lease
Performance |
| Timeline |
| McGrath RentCorp |
| Air Lease |
McGrath RentCorp and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with McGrath RentCorp and Air Lease
The main advantage of trading using opposite McGrath RentCorp and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if McGrath RentCorp 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.| McGrath RentCorp vs. Alta Equipment Group | McGrath RentCorp vs. GATX Corporation | McGrath RentCorp vs. Mega Matrix Corp | McGrath RentCorp vs. FTAI Aviation Ltd |
| Air Lease vs. Ryder System | Air Lease vs. Vestis | Air Lease vs. Willis Lease Finance | Air Lease vs. AerCap Holdings NV |
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 CEOs Directory module to screen CEOs from public companies around the world.
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