Correlation Between AerSale Corp and Nomura Holdings

Can any of the company-specific risk be diversified away by investing in both AerSale Corp and Nomura 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 Nomura 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 Nomura Holdings ADR, you can compare the effects of market volatilities on AerSale Corp and Nomura 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 Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and Nomura Holdings.

Diversification Opportunities for AerSale Corp and Nomura Holdings

0.84

Correlation Coefficient

AerSale Corp  Nomura Holdings

Very poor diversification

The 3 months correlation between AerSale and Nomura is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR 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 Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of AerSale Corp i.e., AerSale Corp and Nomura Holdings go up and down completely randomly.

Pair Corralation between AerSale Corp and Nomura Holdings

Given the investment horizon of 90 days AerSale Corp is expected to under-perform the Nomura Holdings. In addition to that, AerSale Corp is 1.71 times more volatile than Nomura Holdings ADR. It trades about -0.04 of its total potential returns per unit of risk. Nomura Holdings ADR is currently generating about 0.06 per unit of volatility. If you would invest  368.00  in Nomura Holdings ADR on September 13, 2024 and sell it today you would earn a total of  244.00  from holding Nomura Holdings ADR or generate 66.3% return on investment over 90 days.

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

AerSale Corp  vs.  Nomura Holdings ADR

AerSale Corp

Risk-Adjusted Performance

8 of 100

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.

Nomura Holdings ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Nomura Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AerSale Corp and Nomura Holdings

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

The idea behind AerSale Corp and Nomura Holdings ADR 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.