Correlation Between HF Sinclair and Air Lease

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

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

Diversification Opportunities for HF Sinclair and Air Lease

0.64

Correlation Coefficient

HF Sinclair  Air Lease

Poor diversification

The 3 months correlation between DINO and Air is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding HF Sinclair Corp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and HF Sinclair 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 HF Sinclair Corp 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 HF Sinclair i.e., HF Sinclair and Air Lease go up and down completely randomly.

Pair Corralation between HF Sinclair and Air Lease

Given the investment horizon of 90 days HF Sinclair Corp is expected to generate 4.23 times more return on investment than Air Lease. However, HF Sinclair is 4.23 times more volatile than Air Lease. It trades about 0.09 of its potential returns per unit of risk. Air Lease is currently generating about 0.09 per unit of risk. If you would invest  5,206  in HF Sinclair Corp on January 19, 2024 and sell it today you would earn a total of  499.00  from holding HF Sinclair Corp or generate 9.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

HF Sinclair Corp  vs.  Air Lease

HF Sinclair Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HF Sinclair Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, HF Sinclair may actually be approaching a critical reversion point that can send shares even higher in May 2024.

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.

Pair Trading with HF Sinclair and Air Lease

The main advantage of trading using opposite HF Sinclair and Air Lease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HF Sinclair 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 HF Sinclair Corp 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.