Correlation Between Air Lease and CSX

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

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

Diversification Opportunities for Air Lease and CSX

0.89

Correlation Coefficient

Air Lease  CSX

Very poor diversification

The 3 months correlation between Air and CSX is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and CSX Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSX Corporation 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 CSX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSX Corporation has no effect on the direction of Air Lease i.e., Air Lease and CSX go up and down completely randomly.

Pair Corralation between Air Lease and CSX

Allowing for the 90-day total investment horizon Air Lease is expected to generate 1.24 times more return on investment than CSX. However, Air Lease is 1.24 times more volatile than CSX Corporation. It trades about 0.33 of its potential returns per unit of risk. CSX Corporation is currently generating about 0.28 per unit of risk. If you would invest  4,128  in Air Lease on April 20, 2025 and sell it today you would earn a total of  1,624  from holding Air Lease or generate 39.34% return on investment over 90 days.

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

Air Lease  vs.  CSX Corp.

Air Lease

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 26 (%) 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.

CSX Corporation

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CSX Corporation are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, CSX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and CSX

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

The idea behind Air Lease and CSX Corporation 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 Global Correlations module to find global opportunities by holding instruments from different markets.