Correlation Between AerSale Corp and Cannae Holdings

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Can any of the company-specific risk be diversified away by investing in both AerSale Corp and Cannae Holdings 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 Cannae Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AerSale Corp and Cannae Holdings, you can compare the effects of market volatilities on AerSale Corp and Cannae Holdings 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 Cannae Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and Cannae Holdings.

Diversification Opportunities for AerSale Corp and Cannae Holdings

AerSaleCannaeDiversified AwayAerSaleCannaeDiversified Away100%
0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between AerSale and Cannae is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Cannae Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cannae Holdings 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 Cannae Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cannae Holdings has no effect on the direction of AerSale Corp i.e., AerSale Corp and Cannae Holdings go up and down completely randomly.

Pair Corralation between AerSale Corp and Cannae Holdings

Given the investment horizon of 90 days AerSale Corp is expected to generate 1.9 times more return on investment than Cannae Holdings. However, AerSale Corp is 1.9 times more volatile than Cannae Holdings. It trades about 0.11 of its potential returns per unit of risk. Cannae Holdings is currently generating about 0.06 per unit of risk. If you would invest  516.00  in AerSale Corp on September 15, 2024 and sell it today you would earn a total of  99.00  from holding AerSale Corp or generate 19.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

AerSale Corp  vs.  Cannae Holdings

 Performance 
JavaScript chart by amCharts 3.21.15OctNov -1001020
JavaScript chart by amCharts 3.21.15ASLE CNNE
       Timeline  
AerSale Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 8 (%) 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec4.555.566.5
Cannae Holdings 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Cannae Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Cannae Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1818.51919.52020.52121.52222.5

AerSale Corp and Cannae Holdings Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.91-6.68-4.44-2.20.02.334.697.069.42 0.050.100.15
JavaScript chart by amCharts 3.21.15ASLE CNNE
       Returns  

Pair Trading with AerSale Corp and Cannae Holdings

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

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