Correlation Between AerCap Holdings and 631005BJ3

Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and 631005BJ3 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 631005BJ3 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 US631005BJ39, you can compare the effects of market volatilities on AerCap Holdings and 631005BJ3 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 631005BJ3. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and 631005BJ3.

Diversification Opportunities for AerCap Holdings and 631005BJ3

0.33

Correlation Coefficient

AerCap Holdings  631005BJ3

Weak diversification

The 3 months correlation between AerCap and 631005BJ3 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and US631005BJ39 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US631005BJ39 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 631005BJ3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US631005BJ39 has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and 631005BJ3 go up and down completely randomly.

Pair Corralation between AerCap Holdings and 631005BJ3

Considering the 90-day investment horizon AerCap Holdings NV is expected to under-perform the 631005BJ3. In addition to that, AerCap Holdings is 1.53 times more volatile than US631005BJ39. It trades about 0.0 of its total potential returns per unit of risk. US631005BJ39 is currently generating about 0.16 per unit of volatility. If you would invest  9,295  in US631005BJ39 on October 26, 2024 and sell it today you would earn a total of  253.00  from holding US631005BJ39 or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	35.59%
Values	Daily Returns

AerCap Holdings NV  vs.  US631005BJ39

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.

US631005BJ39

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in US631005BJ39 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, 631005BJ3 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AerCap Holdings and 631005BJ3

The main advantage of trading using opposite AerCap Holdings and 631005BJ3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, 631005BJ3 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 631005BJ3 will offset losses from the drop in 631005BJ3's long position.

The idea behind AerCap Holdings NV and US631005BJ39 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.