Correlation Between AerSale Corp and Burlington Stores

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

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

Diversification Opportunities for AerSale Corp and Burlington Stores

0.77

Correlation Coefficient

AerSale Corp  Burlington Stores

Poor diversification

The 3 months correlation between AerSale and Burlington is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Burlington Stores in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Burlington Stores 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 Burlington Stores. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Burlington Stores has no effect on the direction of AerSale Corp i.e., AerSale Corp and Burlington Stores go up and down completely randomly.

Pair Corralation between AerSale Corp and Burlington Stores

Given the investment horizon of 90 days AerSale Corp is expected to under-perform the Burlington Stores. In addition to that, AerSale Corp is 1.46 times more volatile than Burlington Stores. It trades about -0.03 of its total potential returns per unit of risk. Burlington Stores is currently generating about -0.04 per unit of volatility. If you would invest  29,166  in Burlington Stores on September 25, 2024 and sell it today you would lose (426.00) from holding Burlington Stores or give up 1.46% of portfolio value over 90 days.

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

AerSale Corp  vs.  Burlington Stores

AerSale Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 11 (%) 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.

Burlington Stores

Risk-Adjusted Performance

3 of 100

Weak

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

Pair Trading with AerSale Corp and Burlington Stores

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

The idea behind AerSale Corp and Burlington Stores 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.