Correlation Between AerCap Holdings and China Aircraft
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and China Aircraft 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 China Aircraft 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 China Aircraft Leasing, you can compare the effects of market volatilities on AerCap Holdings and China Aircraft 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 China Aircraft. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and China Aircraft.
Diversification Opportunities for AerCap Holdings and China Aircraft
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between AerCap and China is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and China Aircraft Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Aircraft Leasing 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 China Aircraft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Aircraft Leasing has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and China Aircraft go up and down completely randomly.
Pair Corralation between AerCap Holdings and China Aircraft
Considering the 90-day investment horizon AerCap Holdings is expected to generate 2.8 times less return on investment than China Aircraft. But when comparing it to its historical volatility, AerCap Holdings NV is 2.45 times less risky than China Aircraft. It trades about 0.07 of its potential returns per unit of risk. China Aircraft Leasing is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in China Aircraft Leasing on August 23, 2024 and sell it today you would earn a total of 27.00 from holding China Aircraft Leasing or generate 207.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
AerCap Holdings NV vs. China Aircraft Leasing
Performance |
| Timeline |
| AerCap Holdings NV |
| China Aircraft Leasing |
AerCap Holdings and China Aircraft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and China Aircraft
The main advantage of trading using opposite AerCap Holdings and China Aircraft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, China Aircraft 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 China Aircraft will offset losses from the drop in China Aircraft's long position.| AerCap Holdings vs. HE Equipment Services | AerCap Holdings vs. Air Lease | AerCap Holdings vs. Aquagold International | AerCap Holdings vs. Small Cap Core |
| China Aircraft vs. United Rentals | China Aircraft vs. Ashtead Gro | China Aircraft vs. Ashtead Group plc | China Aircraft 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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