Correlation Between Air Lease and SEI INVESTMENTS

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

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

Diversification Opportunities for Air Lease and SEI INVESTMENTS

0.92

Correlation Coefficient

Air Lease  SEI INVESTMENTS

Almost no diversification

The 3 months correlation between Air and SEI is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of Air Lease i.e., Air Lease and SEI INVESTMENTS go up and down completely randomly.

Pair Corralation between Air Lease and SEI INVESTMENTS

Assuming the 90 days trading horizon Air Lease is expected to generate 1.24 times less return on investment than SEI INVESTMENTS. In addition to that, Air Lease is 1.25 times more volatile than SEI INVESTMENTS. It trades about 0.2 of its total potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.3 per unit of volatility. If you would invest  6,100  in SEI INVESTMENTS on September 4, 2024 and sell it today you would earn a total of  1,700  from holding SEI INVESTMENTS or generate 27.87% 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.  SEI INVESTMENTS

Air Lease

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 15 (%) 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.

SEI INVESTMENTS

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SEI INVESTMENTS are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, SEI INVESTMENTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and SEI INVESTMENTS

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

The idea behind Air Lease and SEI INVESTMENTS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.