Correlation Between Nike and AerSale Corp
Can any of the company-specific risk be diversified away by investing in both Nike 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 Nike and AerSale Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nike Inc and AerSale Corp, you can compare the effects of market volatilities on Nike 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 Nike with a short position of AerSale Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nike and AerSale Corp.
Diversification Opportunities for Nike and AerSale Corp
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nike and AerSale is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Nike Inc and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp and Nike 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 Nike Inc 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 Nike i.e., Nike and AerSale Corp go up and down completely randomly.
Pair Corralation between Nike and AerSale Corp
Considering the 90-day investment horizon Nike Inc is expected to generate 0.61 times more return on investment than AerSale Corp. However, Nike Inc is 1.64 times less risky than AerSale Corp. It trades about -0.02 of its potential returns per unit of risk. AerSale Corp is currently generating about -0.04 per unit of risk. If you would invest 10,871 in Nike Inc on September 4, 2024 and sell it today you would lose (2,962) from holding Nike Inc or give up 27.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nike Inc vs. AerSale Corp
Performance |
| Timeline |
| Nike Inc |
| AerSale Corp |
Nike and AerSale Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nike and AerSale Corp
The main advantage of trading using opposite Nike and AerSale Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nike 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 Nike Inc 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.| AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Grupo Aeroportuario del | AerSale Corp vs. Corporacion America Airports | AerSale Corp vs. Aeroports de Paris |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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