Correlation Between AerCap Holdings and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and BJs Restaurants 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 BJs Restaurants 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 BJs Restaurants, you can compare the effects of market volatilities on AerCap Holdings and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and BJs Restaurants.
Diversification Opportunities for AerCap Holdings and BJs Restaurants
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AerCap and BJs is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and BJs Restaurants go up and down completely randomly.
Pair Corralation between AerCap Holdings and BJs Restaurants
Considering the 90-day investment horizon AerCap Holdings NV is expected to generate 0.55 times more return on investment than BJs Restaurants. However, AerCap Holdings NV is 1.81 times less risky than BJs Restaurants. It trades about 0.11 of its potential returns per unit of risk. BJs Restaurants is currently generating about 0.04 per unit of risk. If you would invest 5,459 in AerCap Holdings NV on August 30, 2024 and sell it today you would earn a total of 4,450 from holding AerCap Holdings NV or generate 81.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AerCap Holdings NV vs. BJs Restaurants
Performance |
| Timeline |
| AerCap Holdings NV |
| BJs Restaurants |
AerCap Holdings and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and BJs Restaurants
The main advantage of trading using opposite AerCap Holdings and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| AerCap Holdings vs. Ryder System | AerCap Holdings vs. Alta Equipment Group | AerCap Holdings vs. PROG Holdings | AerCap Holdings vs. GATX Corporation |
| BJs Restaurants vs. Jack In The | BJs Restaurants vs. Potbelly Co | BJs Restaurants vs. Rave Restaurant Group |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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