Correlation Between Air Lease and KLA Tencor

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

By analyzing existing cross correlation between Air Lease and KLA Tencor, you can compare the effects of market volatilities on Air Lease and KLA Tencor 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 KLA Tencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and KLA Tencor.

Diversification Opportunities for Air Lease and KLA Tencor

-0.69

Correlation Coefficient

Air Lease  KLA Tencor

Excellent diversification

The 3 months correlation between Air and KLA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and KLA Tencor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Tencor 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 KLA Tencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Tencor has no effect on the direction of Air Lease i.e., Air Lease and KLA Tencor go up and down completely randomly.

Pair Corralation between Air Lease and KLA Tencor

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.55 times more return on investment than KLA Tencor. However, Air Lease is 1.8 times less risky than KLA Tencor. It trades about 0.13 of its potential returns per unit of risk. KLA Tencor is currently generating about -0.06 per unit of risk. If you would invest  4,399  in Air Lease on September 17, 2024 and sell it today you would earn a total of  543.00  from holding Air Lease or generate 12.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Air Lease  vs.  KLA Tencor

Air Lease

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady essential indicators, Air Lease may actually be approaching a critical reversion point that can send shares even higher in January 2025.

KLA Tencor

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KLA Tencor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Air Lease and KLA Tencor

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

The idea behind Air Lease and KLA Tencor 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.