Correlation Between Fomento Economico and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both Fomento Economico and AerCap Holdings 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 Fomento Economico and AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fomento Economico Mexicano and AerCap Holdings NV, you can compare the effects of market volatilities on Fomento Economico and AerCap Holdings 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 Fomento Economico with a short position of AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fomento Economico and AerCap Holdings.
Diversification Opportunities for Fomento Economico and AerCap Holdings
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fomento and AerCap is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Fomento Economico Mexicano and AerCap Holdings NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AerCap Holdings NV and Fomento Economico 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 Fomento Economico Mexicano are associated (or correlated) with AerCap Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AerCap Holdings NV has no effect on the direction of Fomento Economico i.e., Fomento Economico and AerCap Holdings go up and down completely randomly.
Pair Corralation between Fomento Economico and AerCap Holdings
Considering the 90-day investment horizon Fomento Economico Mexicano is expected to under-perform the AerCap Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Fomento Economico Mexicano is 1.11 times less risky than AerCap Holdings. The stock trades about -0.4 of its potential returns per unit of risk. The AerCap Holdings NV is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,517 in AerCap Holdings NV on August 26, 2024 and sell it today you would earn a total of 286.00 from holding AerCap Holdings NV or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fomento Economico Mexicano vs. AerCap Holdings NV
Performance |
| Timeline |
| Fomento Economico |
| AerCap Holdings NV |
Fomento Economico and AerCap Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fomento Economico and AerCap Holdings
The main advantage of trading using opposite Fomento Economico and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fomento Economico position performs unexpectedly, AerCap Holdings 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 AerCap Holdings will offset losses from the drop in AerCap Holdings' long position.| Fomento Economico vs. Ambev SA ADR | Fomento Economico vs. Boston Beer | Fomento Economico vs. Carlsberg AS | Fomento Economico vs. Molson Coors Brewing |
| AerCap Holdings vs. Ryder System | AerCap Holdings vs. Alta Equipment Group | AerCap Holdings vs. PROG Holdings | AerCap Holdings vs. GATX Corporation |
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 CEOs Directory module to screen CEOs from public companies around the world.
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