Correlation Between AerSale Corp and SP High

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

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

Diversification Opportunities for AerSale Corp and SP High

-0.28

Correlation Coefficient

AerSale Corp  SP High

Very good diversification

The 3 months correlation between AerSale and SPHYDA is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and SP High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SP High Yield 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 SP High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SP High Yield has no effect on the direction of AerSale Corp i.e., AerSale Corp and SP High go up and down completely randomly.

Pair Corralation between AerSale Corp and SP High

Given the investment horizon of 90 days AerSale Corp is expected to generate 4.3 times more return on investment than SP High. However, AerSale Corp is 4.3 times more volatile than SP High Yield. It trades about 0.13 of its potential returns per unit of risk. SP High Yield is currently generating about -0.13 per unit of risk. If you would invest  499.00  in AerSale Corp on September 25, 2024 and sell it today you would earn a total of  114.00  from holding AerSale Corp or generate 22.85% return on investment over 90 days.

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

AerSale Corp  vs.  SP High Yield

Pair Trading with AerSale Corp and SP High

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

The idea behind AerSale Corp and SP High Yield 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.