Correlation Between AerSale Corp and Cardinal Health

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

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

Diversification Opportunities for AerSale Corp and Cardinal Health

0.79

Correlation Coefficient

AerSale Corp  Cardinal Health

Poor diversification

The 3 months correlation between AerSale and Cardinal is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Cardinal Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardinal Health 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 Cardinal Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardinal Health has no effect on the direction of AerSale Corp i.e., AerSale Corp and Cardinal Health go up and down completely randomly.

Pair Corralation between AerSale Corp and Cardinal Health

Given the investment horizon of 90 days AerSale Corp is expected to under-perform the Cardinal Health. In addition to that, AerSale Corp is 2.19 times more volatile than Cardinal Health. It trades about -0.08 of its total potential returns per unit of risk. Cardinal Health is currently generating about -0.14 per unit of volatility. If you would invest  12,177  in Cardinal Health on September 24, 2024 and sell it today you would lose (349.00) from holding Cardinal Health or give up 2.87% of portfolio value over 90 days.

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

AerSale Corp  vs.  Cardinal Health

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.

Cardinal Health

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardinal Health are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, Cardinal Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AerSale Corp and Cardinal Health

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

The idea behind AerSale Corp and Cardinal Health 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.