Correlation Between AerSale Corp and LOWES

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

By analyzing existing cross correlation between AerSale Corp and LOWES INC 65, you can compare the effects of market volatilities on AerSale Corp and LOWES 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 LOWES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and LOWES.

Diversification Opportunities for AerSale Corp and LOWES

0.32

Correlation Coefficient

AerSale Corp  LOWES

Weak diversification

The 3 months correlation between AerSale and LOWES is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and LOWES INC 65 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LOWES INC 65 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 LOWES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LOWES INC 65 has no effect on the direction of AerSale Corp i.e., AerSale Corp and LOWES go up and down completely randomly.

Pair Corralation between AerSale Corp and LOWES

Given the investment horizon of 90 days AerSale Corp is expected to under-perform the LOWES. In addition to that, AerSale Corp is 5.18 times more volatile than LOWES INC 65. It trades about -0.05 of its total potential returns per unit of risk. LOWES INC 65 is currently generating about -0.01 per unit of volatility. If you would invest  11,007  in LOWES INC 65 on October 25, 2024 and sell it today you would lose (379.00) from holding LOWES INC 65 or give up 3.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

AerSale Corp  vs.  LOWES INC 65

AerSale Corp

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 15 (%) 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.

LOWES INC 65

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LOWES INC 65 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, LOWES is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AerSale Corp and LOWES

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

The idea behind AerSale Corp and LOWES INC 65 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.