Correlation Between Stepstone and AerSale Corp

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Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and AerSale Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and AerSale Corp, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of AerSale Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and AerSale Corp.

Diversification Opportunities for Stepstone and AerSale Corp

0.58
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Stepstone and AerSale is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp and Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and AerSale Corp go up and down completely randomly.

Pair Corralation between Stepstone and AerSale Corp

Given the investment horizon of 90 days Stepstone is expected to generate 3.55 times less return on investment than AerSale Corp. But when comparing it to its historical volatility, Stepstone Group is 1.12 times less risky than AerSale Corp. It trades about 0.04 of its potential returns per unit of risk. AerSale Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. 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 Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Stepstone Group  vs.  AerSale Corp

 Performance 
       Timeline  
Stepstone Group 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Stepstone Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent technical and fundamental indicators, Stepstone may actually be approaching a critical reversion point that can send shares even higher in January 2025.
AerSale Corp 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 10 (%) 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.

Stepstone and AerSale Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stepstone and AerSale Corp

The main advantage of trading using opposite Stepstone and AerSale Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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 Stepstone Group 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.
Check out your portfolio center.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

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