Correlation Between Fortress Transp and AerSale Corp

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

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

Diversification Opportunities for Fortress Transp and AerSale Corp

-0.58

Correlation Coefficient

Fortress Transp  AerSale Corp

Excellent diversification

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

Pair Corralation between Fortress Transp and AerSale Corp

Given the investment horizon of 90 days Fortress Transp Infra is expected to under-perform the AerSale Corp. In addition to that, Fortress Transp is 2.79 times more volatile than AerSale Corp. It trades about -0.01 of its total potential returns per unit of risk. AerSale Corp is currently generating about 0.21 per unit of volatility. If you would invest  620.00  in AerSale Corp on December 20, 2024 and sell it today you would earn a total of  219.00  from holding AerSale Corp or generate 35.32% return on investment over 90 days.

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

Fortress Transp Infra  vs.  AerSale Corp

Fortress Transp Infra

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Transp Infra has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Fortress Transp is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

AerSale Corp

Risk-Adjusted Performance

Good

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.

Pair Trading with Fortress Transp and AerSale Corp

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

The idea behind Fortress Transp Infra and AerSale Corp 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.