Correlation Between Semtech and AerSale Corp
Can any of the company-specific risk be diversified away by investing in both Semtech 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 Semtech and AerSale Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Semtech and AerSale Corp, you can compare the effects of market volatilities on Semtech 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 Semtech with a short position of AerSale Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Semtech and AerSale Corp.
Diversification Opportunities for Semtech and AerSale Corp
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Semtech and AerSale is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Semtech and AerSale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerSale Corp and Semtech 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 Semtech 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 Semtech i.e., Semtech and AerSale Corp go up and down completely randomly.
Pair Corralation between Semtech and AerSale Corp
Given the investment horizon of 90 days Semtech is expected to generate 1.16 times more return on investment than AerSale Corp. However, Semtech is 1.16 times more volatile than AerSale Corp. It trades about 0.14 of its potential returns per unit of risk. AerSale Corp is currently generating about -0.08 per unit of risk. If you would invest 1,942 in Semtech on September 2, 2024 and sell it today you would earn a total of 4,462 from holding Semtech or generate 229.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Semtech vs. AerSale Corp
Performance |
| Timeline |
| Semtech |
| AerSale Corp |
Semtech and AerSale Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Semtech and AerSale Corp
The main advantage of trading using opposite Semtech and AerSale Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Semtech 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.| Semtech vs. Power Integrations | Semtech vs. Diodes Incorporated | Semtech vs. MACOM Technology Solutions | Semtech vs. Cirrus Logic |
| 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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