Correlation Between Protective Life and Air Lease

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

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

Diversification Opportunities for Protective Life and Air Lease

0.0

Correlation Coefficient

Protective Life  Air Lease

Pay attention - limited upside

The 3 months correlation between Protective and Air is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Protective Life Dynamic and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and Protective Life 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 Protective Life Dynamic 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 Protective Life i.e., Protective Life and Air Lease go up and down completely randomly.

Pair Corralation between Protective Life and Air Lease

If you would invest  5,014  in Air Lease on February 2, 2024 and sell it today you would earn a total of  15.00  from holding Air Lease or generate 0.3% return on investment over 90 days.

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

Protective Life Dynamic  vs.  Air Lease

Protective Life Dynamic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protective Life Dynamic has generated negative risk-adjusted returns adding no value to fund investors. In spite of very healthy basic indicators, Protective Life is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Air Lease

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, Air Lease disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Protective Life and Air Lease

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