Correlation Between Air Lease and AENA SME

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

By analyzing existing cross correlation between Air Lease and AENA SME UNSPADR110, you can compare the effects of market volatilities on Air Lease and AENA SME 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 AENA SME. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and AENA SME.

Diversification Opportunities for Air Lease and AENA SME

0.31

Correlation Coefficient

Air Lease  AENA SME

Weak diversification

The 3 months correlation between Air and AENA is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and AENA SME UNSPADR110 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AENA SME UNSPADR110 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 AENA SME. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AENA SME UNSPADR110 has no effect on the direction of Air Lease i.e., Air Lease and AENA SME go up and down completely randomly.

Pair Corralation between Air Lease and AENA SME

Assuming the 90 days trading horizon Air Lease is expected to generate 1.55 times less return on investment than AENA SME. In addition to that, Air Lease is 1.17 times more volatile than AENA SME UNSPADR110. It trades about 0.04 of its total potential returns per unit of risk. AENA SME UNSPADR110 is currently generating about 0.08 per unit of volatility. If you would invest  1,313  in AENA SME UNSPADR110 on August 31, 2024 and sell it today you would earn a total of  677.00  from holding AENA SME UNSPADR110 or generate 51.56% return on investment over 90 days.

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

Air Lease  vs.  AENA SME UNSPADR110

Air Lease

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, Air Lease reported solid returns over the last few months and may actually be approaching a breakup point.

AENA SME UNSPADR110

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AENA SME UNSPADR110 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AENA SME reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and AENA SME

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

The idea behind Air Lease and AENA SME UNSPADR110 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.