Correlation Between Air Lease and FirstService Corp

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

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

Diversification Opportunities for Air Lease and FirstService Corp

-0.45

Correlation Coefficient

Air Lease  FirstService Corp

Very good diversification

The 3 months correlation between Air and FirstService is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and FirstService Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FirstService Corp 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 FirstService Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FirstService Corp has no effect on the direction of Air Lease i.e., Air Lease and FirstService Corp go up and down completely randomly.

Pair Corralation between Air Lease and FirstService Corp

Allowing for the 90-day total investment horizon Air Lease is expected to generate 3.94 times less return on investment than FirstService Corp. But when comparing it to its historical volatility, Air Lease is 1.19 times less risky than FirstService Corp. It trades about 0.04 of its potential returns per unit of risk. FirstService Corp is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  23,960  in FirstService Corp on May 21, 2025 and sell it today you would earn a total of  3,392  from holding FirstService Corp or generate 14.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Air Lease  vs.  FirstService Corp

Air Lease

Risk-Adjusted Performance

Weakest

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Air Lease is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

FirstService Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in FirstService Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FirstService Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Air Lease and FirstService Corp

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

The idea behind Air Lease and FirstService Corp 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.