Correlation Between AerSale Corp and ScanSource

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

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

Diversification Opportunities for AerSale Corp and ScanSource

0.53

Correlation Coefficient

AerSale Corp  ScanSource

Very weak diversification

The 3 months correlation between AerSale and ScanSource is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and ScanSource in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ScanSource 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 ScanSource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ScanSource has no effect on the direction of AerSale Corp i.e., AerSale Corp and ScanSource go up and down completely randomly.

Pair Corralation between AerSale Corp and ScanSource

Given the investment horizon of 90 days AerSale Corp is expected to generate 1.0 times more return on investment than ScanSource. However, AerSale Corp is 1.0 times less risky than ScanSource. It trades about -0.02 of its potential returns per unit of risk. ScanSource is currently generating about -0.25 per unit of risk. If you would invest  629.00  in AerSale Corp on October 5, 2024 and sell it today you would lose (6.00) from holding AerSale Corp or give up 0.95% of portfolio value over 90 days.

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

AerSale Corp  vs.  ScanSource

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.

ScanSource

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ScanSource are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, ScanSource is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AerSale Corp and ScanSource

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

The idea behind AerSale Corp and ScanSource 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.