Correlation Between AerSale Corp and HONEYWELL

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

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

Diversification Opportunities for AerSale Corp and HONEYWELL

-0.58

Correlation Coefficient

AerSale Corp  HONEYWELL

Excellent diversification

The 3 months correlation between AerSale and HONEYWELL is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and HONEYWELL INTL INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HONEYWELL INTL 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 HONEYWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HONEYWELL INTL INC has no effect on the direction of AerSale Corp i.e., AerSale Corp and HONEYWELL go up and down completely randomly.

Pair Corralation between AerSale Corp and HONEYWELL

Given the investment horizon of 90 days AerSale Corp is expected to generate 2.11 times more return on investment than HONEYWELL. However, AerSale Corp is 2.11 times more volatile than HONEYWELL INTL INC. It trades about 0.21 of its potential returns per unit of risk. HONEYWELL INTL INC is currently generating about 0.15 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  221.00  from holding AerSale Corp or generate 35.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	49.18%
Values	Daily Returns

AerSale Corp  vs.  HONEYWELL INTL INC

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.

HONEYWELL INTL INC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HONEYWELL INTL INC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, HONEYWELL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with AerSale Corp and HONEYWELL

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

The idea behind AerSale Corp and HONEYWELL INTL 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.