Correlation Between AerSale Corp and Dana

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

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

Diversification Opportunities for AerSale Corp and Dana

0.2

Correlation Coefficient

AerSale Corp  Dana

Modest diversification

The 3 months correlation between AerSale and Dana is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc 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 Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of AerSale Corp i.e., AerSale Corp and Dana go up and down completely randomly.

Pair Corralation between AerSale Corp and Dana

Given the investment horizon of 90 days AerSale Corp is expected to generate 3.86 times less return on investment than Dana. But when comparing it to its historical volatility, AerSale Corp is 1.44 times less risky than Dana. It trades about 0.1 of its potential returns per unit of risk. Dana Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  794.00  in Dana Inc on October 6, 2024 and sell it today you would earn a total of  342.00  from holding Dana Inc or generate 43.07% return on investment over 90 days.

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

AerSale Corp  vs.  Dana Inc

AerSale Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 13 (%) 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.

Dana Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dana Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Dana may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AerSale Corp and Dana

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

The idea behind AerSale Corp and Dana Inc 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.