Correlation Between AerCap Holdings and Telix Pharmaceuticals

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

Diversification Opportunities for AerCap Holdings and Telix Pharmaceuticals

0.08

Correlation Coefficient

AerCap Holdings  Telix Pharmaceuticals

Significant diversification

The 3 months correlation between AerCap and Telix is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals 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 Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between AerCap Holdings and Telix Pharmaceuticals

Considering the 90-day investment horizon AerCap Holdings is expected to generate 195.64 times less return on investment than Telix Pharmaceuticals. But when comparing it to its historical volatility, AerCap Holdings NV is 103.6 times less risky than Telix Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Telix Pharmaceuticals Limited is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Telix Pharmaceuticals Limited on October 24, 2024 and sell it today you would earn a total of  1,686  from holding Telix Pharmaceuticals Limited or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	11.51%
Values	Daily Returns

AerCap Holdings NV  vs.  Telix Pharmaceuticals Limited

AerCap Holdings NV

Risk-Adjusted Performance

1 of 100

Very 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.

Telix Pharmaceuticals

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Telix Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AerCap Holdings and Telix Pharmaceuticals

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

The idea behind AerCap Holdings NV and Telix Pharmaceuticals Limited 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.