Correlation Between Canada Goose and AerSale Corp

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

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

Diversification Opportunities for Canada Goose and AerSale Corp

-0.75

Correlation Coefficient

Canada Goose  AerSale Corp

Pay attention - limited upside

The 3 months correlation between Canada and AerSale is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Canada Goose Holdings and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp and Canada Goose 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 Canada Goose Holdings 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 Canada Goose i.e., Canada Goose and AerSale Corp go up and down completely randomly.

Pair Corralation between Canada Goose and AerSale Corp

Given the investment horizon of 90 days Canada Goose Holdings is expected to generate 0.93 times more return on investment than AerSale Corp. However, Canada Goose Holdings is 1.08 times less risky than AerSale Corp. It trades about -0.04 of its potential returns per unit of risk. AerSale Corp is currently generating about -0.05 per unit of risk. If you would invest  2,183  in Canada Goose Holdings on October 13, 2024 and sell it today you would lose (1,185) from holding Canada Goose Holdings or give up 54.28% of portfolio value over 90 days.

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

Canada Goose Holdings  vs.  AerSale Corp

Canada Goose Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Canada Goose Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

AerSale Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 13 (%) 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 Canada Goose and AerSale Corp

The main advantage of trading using opposite Canada Goose and AerSale Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canada Goose 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 Canada Goose Holdings 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.

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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.