Correlation Between AerSale Corp and Ivy Natural

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

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

Diversification Opportunities for AerSale Corp and Ivy Natural

-0.08

Correlation Coefficient

AerSale Corp  Ivy Natural

Good diversification

The 3 months correlation between AerSale and IVY is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Ivy Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ivy Natural Resources 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 Ivy Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ivy Natural Resources has no effect on the direction of AerSale Corp i.e., AerSale Corp and Ivy Natural go up and down completely randomly.

Pair Corralation between AerSale Corp and Ivy Natural

Given the investment horizon of 90 days AerSale Corp is expected to generate 2.19 times more return on investment than Ivy Natural. However, AerSale Corp is 2.19 times more volatile than Ivy Natural Resources. It trades about 0.21 of its potential returns per unit of risk. Ivy Natural Resources is currently generating about 0.06 per unit of risk. If you would invest  619.00  in AerSale Corp on December 26, 2024 and sell it today you would earn a total of  226.00  from holding AerSale Corp or generate 36.51% return on investment over 90 days.

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

AerSale Corp  vs.  Ivy Natural Resources

AerSale Corp

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 16 (%) 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.

Ivy Natural Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ivy Natural Resources are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Ivy Natural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AerSale Corp and Ivy Natural

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

The idea behind AerSale Corp and Ivy Natural Resources 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.