Correlation Between AerSale Corp and X FAB

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

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

Diversification Opportunities for AerSale Corp and X FAB

-0.65

Correlation Coefficient

AerSale Corp  X FAB

Excellent diversification

The 3 months correlation between AerSale and XFABF is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and X FAB Silicon Foundries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X FAB Silicon 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 X FAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X FAB Silicon has no effect on the direction of AerSale Corp i.e., AerSale Corp and X FAB go up and down completely randomly.

Pair Corralation between AerSale Corp and X FAB

Given the investment horizon of 90 days AerSale Corp is expected to generate 1.26 times more return on investment than X FAB. However, AerSale Corp is 1.26 times more volatile than X FAB Silicon Foundries. It trades about -0.05 of its potential returns per unit of risk. X FAB Silicon Foundries is currently generating about -0.1 per unit of risk. If you would invest  1,111  in AerSale Corp on October 8, 2024 and sell it today you would lose (488.00) from holding AerSale Corp or give up 43.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

AerSale Corp  vs.  X FAB Silicon Foundries

AerSale Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 12 (%) 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.

X FAB Silicon

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days X FAB Silicon Foundries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with AerSale Corp and X FAB

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

The idea behind AerSale Corp and X FAB Silicon Foundries 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.