Correlation Between Nasdaq and AerCap Holdings

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

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

Diversification Opportunities for Nasdaq and AerCap Holdings

0.42

Correlation Coefficient

Nasdaq  AerCap Holdings

Very weak diversification

The 3 months correlation between Nasdaq and AerCap is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc 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 Nasdaq 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 Nasdaq Inc 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 Nasdaq i.e., Nasdaq and AerCap Holdings go up and down completely randomly.

Pair Corralation between Nasdaq and AerCap Holdings

Given the investment horizon of 90 days Nasdaq is expected to generate 5.76 times less return on investment than AerCap Holdings. But when comparing it to its historical volatility, Nasdaq Inc is 1.04 times less risky than AerCap Holdings. It trades about 0.01 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9,033  in AerCap Holdings NV on December 28, 2024 and sell it today you would earn a total of  543.00  from holding AerCap Holdings NV or generate 6.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.77%
Values	Daily Returns

Nasdaq Inc  vs.  AerCap Holdings NV

Nasdaq Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

AerCap Holdings NV

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, AerCap Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nasdaq and AerCap Holdings

The main advantage of trading using opposite Nasdaq and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 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 Nasdaq Inc 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..