Correlation Between Air Lease and PROG Holdings

Can any of the company-specific risk be diversified away by investing in both Air Lease and PROG 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 PROG 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 PROG Holdings, you can compare the effects of market volatilities on Air Lease and PROG 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 PROG Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Lease and PROG Holdings.

Diversification Opportunities for Air Lease and PROG Holdings

0.13

Correlation Coefficient

Air Lease  PROG Holdings

Average diversification

The 3 months correlation between Air and PROG is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Air Lease and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG 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 PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of Air Lease i.e., Air Lease and PROG Holdings go up and down completely randomly.

Pair Corralation between Air Lease and PROG Holdings

Allowing for the 90-day total investment horizon Air Lease is expected to generate 0.65 times more return on investment than PROG Holdings. However, Air Lease is 1.54 times less risky than PROG Holdings. It trades about 0.01 of its potential returns per unit of risk. PROG Holdings is currently generating about -0.14 per unit of risk. If you would invest  4,596  in Air Lease on January 27, 2025 and sell it today you would lose (12.00) from holding Air Lease or give up 0.26% of portfolio value over 90 days.

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

Air Lease  vs.  PROG Holdings

Air Lease

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 1 (%) 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 current stock price mess, may contribute to short-term losses for the institutional investors.

PROG Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Air Lease and PROG Holdings

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

The idea behind Air Lease and PROG 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.