Correlation Between AerSale Corp and Tourmaline Bio

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

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

Diversification Opportunities for AerSale Corp and Tourmaline Bio

0.18

Correlation Coefficient

AerSale Corp  Tourmaline Bio

Average diversification

The 3 months correlation between AerSale and Tourmaline is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Tourmaline Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tourmaline Bio 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 Tourmaline Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tourmaline Bio has no effect on the direction of AerSale Corp i.e., AerSale Corp and Tourmaline Bio go up and down completely randomly.

Pair Corralation between AerSale Corp and Tourmaline Bio

Given the investment horizon of 90 days AerSale Corp is expected to generate 2.39 times less return on investment than Tourmaline Bio. But when comparing it to its historical volatility, AerSale Corp is 1.42 times less risky than Tourmaline Bio. It trades about 0.11 of its potential returns per unit of risk. Tourmaline Bio is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  1,600  in Tourmaline Bio on September 5, 2024 and sell it today you would earn a total of  844.00  from holding Tourmaline Bio or generate 52.75% return on investment over 90 days.

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

AerSale Corp  vs.  Tourmaline Bio

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.

Tourmaline Bio

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Bio are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting primary indicators, Tourmaline Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AerSale Corp and Tourmaline Bio

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

The idea behind AerSale Corp and Tourmaline Bio 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 Global Correlations module to find global opportunities by holding instruments from different markets.