Correlation Between Air Lease and Altisource Asset

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

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

Diversification Opportunities for Air Lease and Altisource Asset

-0.85

Correlation Coefficient

Air Lease  Altisource Asset

Pay attention - limited upside

The 3 months correlation between Air and Altisource is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Altisource Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altisource Asset Man 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 Altisource Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altisource Asset Man has no effect on the direction of Air Lease i.e., Air Lease and Altisource Asset go up and down completely randomly.

Pair Corralation between Air Lease and Altisource Asset

Assuming the 90 days horizon Air Lease is expected to generate 0.08 times more return on investment than Altisource Asset. However, Air Lease is 12.89 times less risky than Altisource Asset. It trades about -0.14 of its potential returns per unit of risk. Altisource Asset Management is currently generating about -0.04 per unit of risk. If you would invest  2,569  in Air Lease on January 25, 2024 and sell it today you would lose (38.00) from holding Air Lease or give up 1.48% of portfolio value over 90 days.

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

Air Lease  vs.  Altisource Asset Management

Air Lease

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Air Lease is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Altisource Asset Man

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Altisource Asset Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in May 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Air Lease and Altisource Asset

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

The idea behind Air Lease and Altisource Asset Management 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..