Correlation Between Rocket Internet and Air Lease
Can any of the company-specific risk be diversified away by investing in both Rocket Internet 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 Rocket Internet and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rocket Internet SE and Air Lease, you can compare the effects of market volatilities on Rocket Internet 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 Rocket Internet with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rocket Internet and Air Lease.
Diversification Opportunities for Rocket Internet and Air Lease
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Rocket and Air is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Rocket Internet SE and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Rocket Internet 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 Rocket Internet SE 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 Rocket Internet i.e., Rocket Internet and Air Lease go up and down completely randomly.
Pair Corralation between Rocket Internet and Air Lease
Assuming the 90 days trading horizon Rocket Internet SE is expected to under-perform the Air Lease. In addition to that, Rocket Internet is 1.03 times more volatile than Air Lease. It trades about -0.03 of its total potential returns per unit of risk. Air Lease is currently generating about 0.02 per unit of volatility. If you would invest 3,894 in Air Lease on October 14, 2024 and sell it today you would earn a total of 486.00 from holding Air Lease or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rocket Internet SE vs. Air Lease
Performance |
| Timeline |
| Rocket Internet SE |
| Air Lease |
Rocket Internet and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rocket Internet and Air Lease
The main advantage of trading using opposite Rocket Internet and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rocket Internet 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 effect of pair diversification on risk is to reduce it, but we should note this doesn't apply to all risk types. When we trade pairs against Rocket Internet as a counterpart, there is always some inherent risk that will never be diversified away no matter what. This volatility limits the effect of tactical diversification using pair trading. Rocket Internet's systematic risk is the inherent uncertainty of the entire market, and therefore cannot be mitigated even by pair-trading it against the equity that is not highly correlated to it. On the other hand, Rocket Internet's unsystematic risk describes the types of risk that we can protect against, at least to some degree, by selecting a matching pair that is not perfectly correlated to Rocket Internet SE.
| Air Lease vs. Entravision Communications | Air Lease vs. EAT WELL INVESTMENT | Air Lease vs. Rocket Internet SE | Air Lease vs. COMPUTERSHARE |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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