Correlation Between AerSale Corp and Air Lease

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

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

Diversification Opportunities for AerSale Corp and Air Lease

0.93

Correlation Coefficient

AerSale Corp  Air Lease

Almost no diversification

The 3 months correlation between AerSale and Air is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Air Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Lease and AerSale Corp 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 AerSale Corp are associated (or correlated) with Air Lease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Lease has no effect on the direction of AerSale Corp i.e., AerSale Corp and Air Lease go up and down completely randomly.

Pair Corralation between AerSale Corp and Air Lease

Given the investment horizon of 90 days AerSale Corp is expected to generate 1.6 times more return on investment than Air Lease. However, AerSale Corp is 1.6 times more volatile than Air Lease. It trades about 0.13 of its potential returns per unit of risk. Air Lease is currently generating about 0.12 per unit of risk. If you would invest  533.00  in AerSale Corp on September 21, 2024 and sell it today you would earn a total of  75.00  from holding AerSale Corp or generate 14.07% return on investment over 90 days.

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

AerSale Corp  vs.  Air Lease

AerSale Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, AerSale Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Air Lease

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Air Lease are ranked lower than 4 (%) 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.

Pair Trading with AerSale Corp and Air Lease

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

The idea behind AerSale Corp and Air Lease 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.