Correlation Between Air Lease and GEN Restaurant

Can any of the company-specific risk be diversified away by investing in both Air Lease and GEN Restaurant 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 Air Lease and GEN Restaurant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Air Lease and GEN Restaurant Group,, you can compare the effects of market volatilities on Air Lease and GEN Restaurant 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 Air Lease with a short position of GEN Restaurant. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and GEN Restaurant.

Diversification Opportunities for Air Lease and GEN Restaurant

-0.1

Correlation Coefficient

Air Lease  GEN Restaurant

Good diversification

The 3 months correlation between Air and GEN is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and GEN Restaurant Group, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GEN Restaurant Group, and Air Lease 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 Air Lease are associated (or correlated) with GEN Restaurant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GEN Restaurant Group, has no effect on the direction of Air Lease i.e., Air Lease and GEN Restaurant go up and down completely randomly.

Pair Corralation between Air Lease and GEN Restaurant

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.48 times more return on investment than GEN Restaurant. However, Air Lease is 2.07 times less risky than GEN Restaurant. It trades about -0.23 of its potential returns per unit of risk. GEN Restaurant Group, is currently generating about -0.13 per unit of risk. If you would invest  5,193  in Air Lease on September 24, 2024 and sell it today you would lose (332.00) from holding Air Lease or give up 6.39% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Air Lease  vs.  GEN Restaurant Group,

Air Lease

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

GEN Restaurant Group,

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GEN Restaurant Group, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, GEN Restaurant is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Air Lease and GEN Restaurant

The main advantage of trading using opposite Air Lease and GEN Restaurant positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, GEN Restaurant 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 GEN Restaurant will offset losses from the drop in GEN Restaurant's long position.

The idea behind Air Lease and GEN Restaurant Group, 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.