Correlation Between Connecticut Light and AerSale Corp

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

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

Diversification Opportunities for Connecticut Light and AerSale Corp

-0.71

Correlation Coefficient

Connecticut Light  AerSale Corp

Pay attention - limited upside

The 3 months correlation between Connecticut and AerSale is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding The Connecticut Light and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp and Connecticut Light 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 The Connecticut Light are associated (or correlated) with AerSale Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerSale Corp has no effect on the direction of Connecticut Light i.e., Connecticut Light and AerSale Corp go up and down completely randomly.

Pair Corralation between Connecticut Light and AerSale Corp

Assuming the 90 days horizon The Connecticut Light is expected to under-perform the AerSale Corp. But the pink sheet apears to be less risky and, when comparing its historical volatility, The Connecticut Light is 2.25 times less risky than AerSale Corp. The pink sheet trades about -0.01 of its potential returns per unit of risk. The AerSale Corp is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  516.00  in AerSale Corp on September 15, 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	Weak
Accuracy	98.44%
Values	Daily Returns

The Connecticut Light  vs.  AerSale Corp

Connecticut Light

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Connecticut Light has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical indicators, Connecticut Light is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Connecticut Light and AerSale Corp

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

The idea behind The Connecticut Light and AerSale Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.