Correlation Between AerSale Corp and Catalent

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

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

Diversification Opportunities for AerSale Corp and Catalent

0.21

Correlation Coefficient

AerSale Corp  Catalent

Modest diversification

The 3 months correlation between AerSale and Catalent is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Catalent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalent 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 Catalent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalent has no effect on the direction of AerSale Corp i.e., AerSale Corp and Catalent go up and down completely randomly.

Pair Corralation between AerSale Corp and Catalent

Given the investment horizon of 90 days AerSale Corp is expected to generate 4.18 times more return on investment than Catalent. However, AerSale Corp is 4.18 times more volatile than Catalent. It trades about 0.13 of its potential returns per unit of risk. Catalent is currently generating about 0.14 per unit of risk. If you would invest  506.00  in AerSale Corp on September 24, 2024 and sell it today you would earn a total of  114.00  from holding AerSale Corp or generate 22.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

AerSale Corp  vs.  Catalent

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.

Catalent

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Catalent are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Catalent is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AerSale Corp and Catalent

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

The idea behind AerSale Corp and Catalent 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.