Correlation Between AerCap Holdings and Mako Mining

Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Mako Mining 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 Mako Mining 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 Mako Mining Corp, you can compare the effects of market volatilities on AerCap Holdings and Mako Mining 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 Mako Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Mako Mining.

Diversification Opportunities for AerCap Holdings and Mako Mining

0.05

Correlation Coefficient

AerCap Holdings  Mako Mining

Significant diversification

The 3 months correlation between AerCap and Mako is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Mako Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mako Mining Corp 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 Mako Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mako Mining Corp has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Mako Mining go up and down completely randomly.

Pair Corralation between AerCap Holdings and Mako Mining

Considering the 90-day investment horizon AerCap Holdings is expected to generate 17.52 times less return on investment than Mako Mining. But when comparing it to its historical volatility, AerCap Holdings NV is 3.43 times less risky than Mako Mining. It trades about 0.04 of its potential returns per unit of risk. Mako Mining Corp is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  210.00  in Mako Mining Corp on October 10, 2024 and sell it today you would earn a total of  39.00  from holding Mako Mining Corp or generate 18.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

AerCap Holdings NV  vs.  Mako Mining Corp

AerCap Holdings NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, AerCap Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Mako Mining Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mako Mining Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mako Mining reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AerCap Holdings and Mako Mining

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

The idea behind AerCap Holdings NV and Mako Mining 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.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.