Correlation Between AerSale Corp and United Parks

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Can any of the company-specific risk be diversified away by investing in both AerSale Corp and United Parks 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 United Parks into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AerSale Corp and United Parks Resorts, you can compare the effects of market volatilities on AerSale Corp and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and United Parks.

Diversification Opportunities for AerSale Corp and United Parks

AerSaleUnitedDiversified AwayAerSaleUnitedDiversified Away100%
0.89
  Correlation Coefficient

Very poor diversification

The 3 months correlation between AerSale and United is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of AerSale Corp i.e., AerSale Corp and United Parks go up and down completely randomly.

Pair Corralation between AerSale Corp and United Parks

Given the investment horizon of 90 days AerSale Corp is expected to generate 1.26 times more return on investment than United Parks. However, AerSale Corp is 1.26 times more volatile than United Parks Resorts. It trades about 0.13 of its potential returns per unit of risk. United Parks Resorts is currently generating about 0.06 per unit of risk. If you would invest  506.00  in AerSale Corp on September 24, 2024 and sell it today you would earn a total of  114.00  from holding AerSale Corp or generate 22.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

AerSale Corp  vs.  United Parks Resorts

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -15-10-505101520
JavaScript chart by amCharts 3.21.15ASLE PRKS
       Timeline  
AerSale Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 10 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4.555.566.5
United Parks Resorts 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in United Parks Resorts are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, United Parks may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec48505254565860

AerSale Corp and United Parks Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.54-6.4-4.25-2.110.03572.164.46.648.8711.11 0.020.040.060.08
JavaScript chart by amCharts 3.21.15ASLE PRKS
       Returns  

Pair Trading with AerSale Corp and United Parks

The main advantage of trading using opposite AerSale Corp and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerSale Corp position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' long position.
The idea behind AerSale Corp and United Parks Resorts 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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