Correlation Between AerCap Holdings and Fortress Transp
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Fortress Transp 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 Fortress Transp 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 Fortress Transp Infra, you can compare the effects of market volatilities on AerCap Holdings and Fortress Transp 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 Fortress Transp. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Fortress Transp.
Diversification Opportunities for AerCap Holdings and Fortress Transp
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AerCap and Fortress is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Fortress Transp Infra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Transp Infra 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 Fortress Transp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Transp Infra has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Fortress Transp go up and down completely randomly.
Pair Corralation between AerCap Holdings and Fortress Transp
Considering the 90-day investment horizon AerCap Holdings is expected to generate 11.93 times less return on investment than Fortress Transp. But when comparing it to its historical volatility, AerCap Holdings NV is 2.54 times less risky than Fortress Transp. It trades about 0.07 of its potential returns per unit of risk. Fortress Transp Infra is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 13,996 in Fortress Transp Infra on August 23, 2024 and sell it today you would earn a total of 3,500 from holding Fortress Transp Infra or generate 25.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AerCap Holdings NV vs. Fortress Transp Infra
Performance |
| Timeline |
| AerCap Holdings NV |
| Fortress Transp Infra |
AerCap Holdings and Fortress Transp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and Fortress Transp
The main advantage of trading using opposite AerCap Holdings and Fortress Transp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Fortress Transp 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 Fortress Transp will offset losses from the drop in Fortress Transp'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 |
| Fortress Transp vs. HE Equipment Services | Fortress Transp vs. Air Lease | Fortress Transp vs. Aquagold International | Fortress Transp vs. Small Cap Core |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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