Correlation Between AerSale Corp and NBCUNIVERSAL

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

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

Diversification Opportunities for AerSale Corp and NBCUNIVERSAL

-0.18

Correlation Coefficient

AerSale Corp  NBCUNIVERSAL

Good diversification

The 3 months correlation between AerSale and NBCUNIVERSAL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and NBCUNIVERSAL MEDIA LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCUNIVERSAL MEDIA LLC 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 NBCUNIVERSAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCUNIVERSAL MEDIA LLC has no effect on the direction of AerSale Corp i.e., AerSale Corp and NBCUNIVERSAL go up and down completely randomly.

Pair Corralation between AerSale Corp and NBCUNIVERSAL

Given the investment horizon of 90 days AerSale Corp is expected to under-perform the NBCUNIVERSAL. But the stock apears to be less risky and, when comparing its historical volatility, AerSale Corp is 32.01 times less risky than NBCUNIVERSAL. The stock trades about -0.04 of its potential returns per unit of risk. The NBCUNIVERSAL MEDIA LLC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  10,792  in NBCUNIVERSAL MEDIA LLC on September 25, 2024 and sell it today you would earn a total of  0.00  from holding NBCUNIVERSAL MEDIA LLC or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	38.31%
Values	Daily Returns

AerSale Corp  vs.  NBCUNIVERSAL MEDIA LLC

AerSale Corp

Risk-Adjusted Performance

10 of 100

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.

NBCUNIVERSAL MEDIA LLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with AerSale Corp and NBCUNIVERSAL

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

The idea behind AerSale Corp and NBCUNIVERSAL MEDIA LLC 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.