Correlation Between AerSale Corp and Floor Decor

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

By analyzing existing cross correlation between AerSale Corp and Floor Decor Holdings, you can compare the effects of market volatilities on AerSale Corp and Floor Decor 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 Floor Decor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerSale Corp and Floor Decor.

Diversification Opportunities for AerSale Corp and Floor Decor

-0.54

Correlation Coefficient

AerSale Corp  Floor Decor

Excellent diversification

The 3 months correlation between AerSale and Floor is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding AerSale Corp and Floor Decor Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floor Decor Holdings 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 Floor Decor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floor Decor Holdings has no effect on the direction of AerSale Corp i.e., AerSale Corp and Floor Decor go up and down completely randomly.

Pair Corralation between AerSale Corp and Floor Decor

Given the investment horizon of 90 days AerSale Corp is expected to generate 0.91 times more return on investment than Floor Decor. However, AerSale Corp is 1.1 times less risky than Floor Decor. It trades about 0.1 of its potential returns per unit of risk. Floor Decor Holdings is currently generating about -0.08 per unit of risk. If you would invest  630.00  in AerSale Corp on January 10, 2025 and sell it today you would earn a total of  105.00  from holding AerSale Corp or generate 16.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AerSale Corp  vs.  Floor Decor Holdings

AerSale Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AerSale Corp are ranked lower than 7 (%) 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.

Floor Decor Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Floor Decor Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in May 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with AerSale Corp and Floor Decor

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

The idea behind AerSale Corp and Floor Decor Holdings 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.