Correlation Between AerCap Holdings and Barloworld
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Barloworld 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 Barloworld 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 Barloworld Ltd ADR, you can compare the effects of market volatilities on AerCap Holdings and Barloworld 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 Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Barloworld.
Diversification Opportunities for AerCap Holdings and Barloworld
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between AerCap and Barloworld is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR 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 Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Barloworld go up and down completely randomly.
Pair Corralation between AerCap Holdings and Barloworld
Considering the 90-day investment horizon AerCap Holdings is expected to generate 2.76 times less return on investment than Barloworld. But when comparing it to its historical volatility, AerCap Holdings NV is 4.45 times less risky than Barloworld. It trades about 0.11 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 403.00 in Barloworld Ltd ADR on August 25, 2024 and sell it today you would earn a total of 20.00 from holding Barloworld Ltd ADR or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
AerCap Holdings NV vs. Barloworld Ltd ADR
Performance |
| Timeline |
| AerCap Holdings NV |
| Barloworld ADR |
AerCap Holdings and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and Barloworld
The main advantage of trading using opposite AerCap Holdings and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| AerCap Holdings vs. Ryder System | AerCap Holdings vs. Alta Equipment Group | AerCap Holdings vs. PROG Holdings | AerCap Holdings vs. GATX Corporation |
| Barloworld vs. United Rentals | Barloworld vs. AerCap Holdings NV | Barloworld vs. Fortress Transp Infra | Barloworld vs. U Haul Holding |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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