Correlation Between AerSale Corp and Federal Home
Can any of the company-specific risk be diversified away by investing in both AerSale Corp and Federal Home 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 Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AerSale Corp and Federal Home 530, you can compare the effects of market volatilities on AerSale Corp and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and Federal Home.
Diversification Opportunities for AerSale Corp and Federal Home
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AerSale and Federal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Federal Home 530 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home 530 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home 530 has no effect on the direction of AerSale Corp i.e., AerSale Corp and Federal Home go up and down completely randomly.
Pair Corralation between AerSale Corp and Federal Home
Given the investment horizon of 90 days AerSale Corp is expected to under-perform the Federal Home. But the stock apears to be less risky and, when comparing its historical volatility, AerSale Corp is 1.59 times less risky than Federal Home. The stock trades about -0.04 of its potential returns per unit of risk. The Federal Home 530 is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 375.00 in Federal Home 530 on September 3, 2024 and sell it today you would earn a total of 1,186 from holding Federal Home 530 or generate 316.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AerSale Corp vs. Federal Home 530
Performance |
| Timeline |
| AerSale Corp |
| Federal Home 530 |
AerSale Corp and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerSale Corp and Federal Home
The main advantage of trading using opposite AerSale Corp and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerSale Corp position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Corporacion America Airports | AerSale Corp vs. Aeroports de Paris |
| Federal Home vs. Federal Home Loan | Federal Home vs. Deckers Outdoor | Federal Home vs. TechnipFMC PLC | Federal Home vs. Singular Genomics Systems |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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