Correlation Between AerCap Holdings and PROG Holdings

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

Diversification Opportunities for AerCap Holdings and PROG Holdings

0.47

Correlation Coefficient

AerCap Holdings  PROG Holdings

Very weak diversification

The 3 months correlation between AerCap and PROG is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and PROG Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROG Holdings 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 PROG Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROG Holdings has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and PROG Holdings go up and down completely randomly.

Pair Corralation between AerCap Holdings and PROG Holdings

Considering the 90-day investment horizon AerCap Holdings NV is expected to generate 0.76 times more return on investment than PROG Holdings. However, AerCap Holdings NV is 1.32 times less risky than PROG Holdings. It trades about -0.11 of its potential returns per unit of risk. PROG Holdings is currently generating about -0.28 per unit of risk. If you would invest  9,803  in AerCap Holdings NV on September 23, 2024 and sell it today you would lose (350.00) from holding AerCap Holdings NV or give up 3.57% of portfolio value over 90 days.

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

AerCap Holdings NV  vs.  PROG Holdings

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.

PROG Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PROG Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AerCap Holdings and PROG Holdings

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

The idea behind AerCap Holdings NV and PROG 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.