Correlation Between Margo Caribe and AerCap Holdings

Can any of the company-specific risk be diversified away by investing in both Margo Caribe and AerCap 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 Margo Caribe and AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Margo Caribe and AerCap Holdings NV, you can compare the effects of market volatilities on Margo Caribe and AerCap 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 Margo Caribe with a short position of AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Margo Caribe and AerCap Holdings.

Diversification Opportunities for Margo Caribe and AerCap Holdings

-0.18

Correlation Coefficient

Margo Caribe  AerCap Holdings

Good diversification

The 3 months correlation between Margo and AerCap is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Margo Caribe and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV and Margo Caribe 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 Margo Caribe are associated (or correlated) with AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of Margo Caribe i.e., Margo Caribe and AerCap Holdings go up and down completely randomly.

Pair Corralation between Margo Caribe and AerCap Holdings

Given the investment horizon of 90 days Margo Caribe is expected to generate 11.98 times more return on investment than AerCap Holdings. However, Margo Caribe is 11.98 times more volatile than AerCap Holdings NV. It trades about 0.04 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.06 per unit of risk. If you would invest  600.00  in Margo Caribe on October 11, 2024 and sell it today you would lose (135.00) from holding Margo Caribe or give up 22.5% of portfolio value over 90 days.

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

Margo Caribe  vs.  AerCap Holdings NV

Margo Caribe

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Margo Caribe are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Margo Caribe displayed solid returns over the last few months and may actually be approaching a breakup point.

AerCap Holdings NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 2 (%) 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.

Pair Trading with Margo Caribe and AerCap Holdings

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

The idea behind Margo Caribe and AerCap Holdings NV 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.