Correlation Between SOLSTAD OFFSHORE and Air Lease
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE and Air Lease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and Air Lease, you can compare the effects of market volatilities on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE with a short position of Air Lease. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and Air Lease.
Diversification Opportunities for SOLSTAD OFFSHORE and Air Lease
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between SOLSTAD and Air is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and Air Lease go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and Air Lease
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 2.5 times more return on investment than Air Lease. However, SOLSTAD OFFSHORE is 2.5 times more volatile than Air Lease. It trades about 0.23 of its potential returns per unit of risk. Air Lease is currently generating about 0.37 per unit of risk. If you would invest 282.00 in SOLSTAD OFFSHORE NK on September 1, 2024 and sell it today you would earn a total of 76.00 from holding SOLSTAD OFFSHORE NK or generate 26.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. Air Lease
Performance |
| Timeline |
| SOLSTAD OFFSHORE |
| Air Lease |
SOLSTAD OFFSHORE and Air Lease Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLSTAD OFFSHORE and Air Lease
The main advantage of trading using opposite SOLSTAD OFFSHORE and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE 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.| SOLSTAD OFFSHORE vs. Clarkson PLC | SOLSTAD OFFSHORE vs. Wilh Wilhelmsen Holding | SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. NMI Holdings |
| Air Lease vs. Caseys General Stores | Air Lease vs. Ping An Insurance | Air Lease vs. Selective Insurance Group | Air Lease vs. The Hanover Insurance |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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