Correlation Between Air Lease and Gladstone Investment
Can any of the company-specific risk be diversified away by investing in both Air Lease and Gladstone Investment 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 Gladstone Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Lease and Gladstone Investment, you can compare the effects of market volatilities on Air Lease and Gladstone Investment 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 Gladstone Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and Gladstone Investment.
Diversification Opportunities for Air Lease and Gladstone Investment
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Air and Gladstone is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Gladstone Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gladstone Investment 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 Gladstone Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gladstone Investment has no effect on the direction of Air Lease i.e., Air Lease and Gladstone Investment go up and down completely randomly.
Pair Corralation between Air Lease and Gladstone Investment
Assuming the 90 days trading horizon Air Lease is expected to generate 1.19 times more return on investment than Gladstone Investment. However, Air Lease is 1.19 times more volatile than Gladstone Investment. It trades about 0.06 of its potential returns per unit of risk. Gladstone Investment is currently generating about 0.04 per unit of risk. If you would invest 3,686 in Air Lease on September 24, 2024 and sell it today you would earn a total of 954.00 from holding Air Lease or generate 25.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Air Lease vs. Gladstone Investment
Performance |
Timeline |
Air Lease |
Gladstone Investment |
Air Lease and Gladstone Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Air Lease and Gladstone Investment
The main advantage of trading using opposite Air Lease and Gladstone Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Lease position performs unexpectedly, Gladstone Investment 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 Gladstone Investment will offset losses from the drop in Gladstone Investment's long position.Air Lease vs. Ashtead Group plc | Air Lease vs. WillScot Mobile Mini | Air Lease vs. Avis Budget Group | Air Lease vs. Sixt SE |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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