Correlation Between Air Lease and U Haul

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

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

Diversification Opportunities for Air Lease and U Haul

0.08

Correlation Coefficient

Air Lease  U Haul

Significant diversification

The 3 months correlation between Air and UHAL is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding 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 U Haul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of Air Lease i.e., Air Lease and U Haul go up and down completely randomly.

Pair Corralation between Air Lease and U Haul

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.78 times more return on investment than U Haul. However, Air Lease is 1.28 times less risky than U Haul. It trades about 0.07 of its potential returns per unit of risk. U Haul Holding is currently generating about 0.03 per unit of risk. If you would invest  5,054  in Air Lease on February 5, 2024 and sell it today you would earn a total of  87.00  from holding Air Lease or generate 1.72% return on investment over 90 days.

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

Air Lease  vs.  U Haul Holding

Air Lease

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 16 (%) 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.

U Haul Holding

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in U Haul Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, U Haul is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Air Lease and U Haul

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

The idea behind Air Lease and U Haul Holding 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.