Correlation Between AerCap Holdings and Goldman Sachs

Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Goldman Sachs 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 AerCap Holdings and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AerCap Holdings NV and Goldman Sachs Capital, you can compare the effects of market volatilities on AerCap Holdings and Goldman Sachs 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 AerCap Holdings with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Goldman Sachs.

Diversification Opportunities for AerCap Holdings and Goldman Sachs

-0.11

Correlation Coefficient

AerCap Holdings  Goldman Sachs

Good diversification

The 3 months correlation between AerCap and Goldman is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Goldman Sachs Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Capital and AerCap Holdings 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 AerCap Holdings NV are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Capital has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Goldman Sachs go up and down completely randomly.

Pair Corralation between AerCap Holdings and Goldman Sachs

Considering the 90-day investment horizon AerCap Holdings NV is expected to generate 0.66 times more return on investment than Goldman Sachs. However, AerCap Holdings NV is 1.53 times less risky than Goldman Sachs. It trades about 0.15 of its potential returns per unit of risk. Goldman Sachs Capital is currently generating about -0.03 per unit of risk. If you would invest  9,282  in AerCap Holdings NV on December 19, 2024 and sell it today you would earn a total of  1,153  from holding AerCap Holdings NV or generate 12.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

AerCap Holdings NV  vs.  Goldman Sachs Capital

AerCap Holdings NV

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, AerCap Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, Goldman Sachs is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with AerCap Holdings and Goldman Sachs

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

The idea behind AerCap Holdings NV and Goldman Sachs Capital 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.