Correlation Between AerCap Holdings and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Norwegian Air 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 Norwegian Air 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 Norwegian Air Shuttle, you can compare the effects of market volatilities on AerCap Holdings and Norwegian Air 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 Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Norwegian Air.
Diversification Opportunities for AerCap Holdings and Norwegian Air
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AerCap and Norwegian is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle 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 Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Norwegian Air go up and down completely randomly.
Pair Corralation between AerCap Holdings and Norwegian Air
Assuming the 90 days horizon AerCap Holdings NV is expected to under-perform the Norwegian Air. But the stock apears to be less risky and, when comparing its historical volatility, AerCap Holdings NV is 1.96 times less risky than Norwegian Air. The stock trades about -0.11 of its potential returns per unit of risk. The Norwegian Air Shuttle is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 95.00 in Norwegian Air Shuttle on September 25, 2024 and sell it today you would lose (1.00) from holding Norwegian Air Shuttle or give up 1.05% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
AerCap Holdings NV vs. Norwegian Air Shuttle
Performance |
Timeline |
AerCap Holdings NV |
Norwegian Air Shuttle |
AerCap Holdings and Norwegian Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with AerCap Holdings and Norwegian Air
The main advantage of trading using opposite AerCap Holdings and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.AerCap Holdings vs. Airports of Thailand | AerCap Holdings vs. Aena SME SA | AerCap Holdings vs. AENA SME UNSPADR110 | AerCap Holdings vs. Grupo Aeroportuario del |
Norwegian Air vs. Airports of Thailand | Norwegian Air vs. Aena SME SA | Norwegian Air vs. AENA SME UNSPADR110 | Norwegian Air vs. AerCap Holdings NV |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals |