Correlation Between Air Lease and Hawaiian Holdings

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

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

Diversification Opportunities for Air Lease and Hawaiian Holdings

-0.87

Correlation Coefficient

Air Lease  Hawaiian Holdings

Pay attention - limited upside

The 3 months correlation between Air and Hawaiian is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and Hawaiian Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hawaiian Holdings 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 Hawaiian Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hawaiian Holdings has no effect on the direction of Air Lease i.e., Air Lease and Hawaiian Holdings go up and down completely randomly.

Pair Corralation between Air Lease and Hawaiian Holdings

Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.81 times less return on investment than Hawaiian Holdings. But when comparing it to its historical volatility, Air Lease is 4.97 times less risky than Hawaiian Holdings. It trades about 0.05 of its potential returns per unit of risk. Hawaiian Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,649  in Hawaiian Holdings on February 7, 2024 and sell it today you would lose (421.00) from holding Hawaiian Holdings or give up 25.53% 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.  Hawaiian Holdings

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

Hawaiian Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hawaiian Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Air Lease and Hawaiian Holdings

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

The idea behind Air Lease and Hawaiian Holdings 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.