Correlation Between Air Lease and Universal

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

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

Diversification Opportunities for Air Lease and Universal

0.93

Correlation Coefficient

Air Lease  Universal

Almost no diversification

The 3 months correlation between Air and Universal is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Universal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Universal 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 Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Universal has no effect on the direction of Air Lease i.e., Air Lease and Universal go up and down completely randomly.

Pair Corralation between Air Lease and Universal

Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.0 times less return on investment than Universal. In addition to that, Air Lease is 1.17 times more volatile than Universal. It trades about 0.06 of its total potential returns per unit of risk. Universal is currently generating about 0.07 per unit of volatility. If you would invest  5,174  in Universal on September 22, 2024 and sell it today you would earn a total of  289.00  from holding Universal or generate 5.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Air Lease  vs.  Universal

Air Lease

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Universal

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Universal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Universal is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Air Lease and Universal

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

The idea behind Air Lease and Universal 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.