Correlation Between CAI International and Air Lease

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

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

Diversification Opportunities for CAI International and Air Lease

0.0

Correlation Coefficient

CAI International  Air Lease

Pay attention - limited upside

The 3 months correlation between CAI and Air is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CAI International and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and CAI International 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 CAI International are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of CAI International i.e., CAI International and Air Lease go up and down completely randomly.

Pair Corralation between CAI International and Air Lease

If you would invest  3,693  in Air Lease on January 26, 2024 and sell it today you would earn a total of  1,447  from holding Air Lease or generate 39.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

CAI International  vs.  Air Lease

CAI International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CAI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CAI International is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

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 quite weak essential indicators, Air Lease disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CAI International and Air Lease

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

The idea behind CAI International and Air Lease 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.