Correlation Between AerSale Corp and Valneva SE

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

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

Diversification Opportunities for AerSale Corp and Valneva SE

-0.85

Correlation Coefficient

AerSale Corp  Valneva SE

Pay attention - limited upside

The 3 months correlation between AerSale and Valneva is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Valneva SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valneva SE 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 Valneva SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valneva SE ADR has no effect on the direction of AerSale Corp i.e., AerSale Corp and Valneva SE go up and down completely randomly.

Pair Corralation between AerSale Corp and Valneva SE

Given the investment horizon of 90 days AerSale Corp is expected to generate 1.07 times more return on investment than Valneva SE. However, AerSale Corp is 1.07 times more volatile than Valneva SE ADR. It trades about 0.11 of its potential returns per unit of risk. Valneva SE ADR is currently generating about -0.25 per unit of risk. If you would invest  516.00  in AerSale Corp on September 16, 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 Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

AerSale Corp  vs.  Valneva SE 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.

Valneva SE ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Valneva SE ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AerSale Corp and Valneva SE

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

The idea behind AerSale Corp and Valneva SE 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.