Correlation Between AerCap Holdings and National CineMedia

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

Diversification Opportunities for AerCap Holdings and National CineMedia

0.03

Correlation Coefficient

AerCap Holdings  National CineMedia

Significant diversification

The 3 months correlation between AerCap and National is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and National CineMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National CineMedia 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 National CineMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National CineMedia has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and National CineMedia go up and down completely randomly.

Pair Corralation between AerCap Holdings and National CineMedia

Considering the 90-day investment horizon AerCap Holdings NV is expected to under-perform the National CineMedia. But the stock apears to be less risky and, when comparing its historical volatility, AerCap Holdings NV is 3.66 times less risky than National CineMedia. The stock trades about -0.03 of its potential returns per unit of risk. The National CineMedia is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  674.00  in National CineMedia on October 27, 2024 and sell it today you would earn a total of  16.00  from holding National CineMedia or generate 2.37% 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.  National CineMedia

AerCap Holdings NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AerCap Holdings NV has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

National CineMedia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National CineMedia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AerCap Holdings and National CineMedia

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

The idea behind AerCap Holdings NV and National CineMedia 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.