Correlation Between Microsoft and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and AerCap Holdings NV, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and AerCap Holdings.
Diversification Opportunities for Microsoft and AerCap Holdings
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and AerCap is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft 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 Microsoft 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 Microsoft 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 Microsoft i.e., Microsoft and AerCap Holdings go up and down completely randomly.
Pair Corralation between Microsoft and AerCap Holdings
Given the investment horizon of 90 days Microsoft is expected to under-perform the AerCap Holdings. In addition to that, Microsoft is 1.27 times more volatile than AerCap Holdings NV. It trades about -0.04 of its total potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.17 per unit of volatility. If you would invest 9,547 in AerCap Holdings NV on August 30, 2024 and sell it today you would earn a total of 483.00 from holding AerCap Holdings NV or generate 5.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Microsoft vs. AerCap Holdings NV
Performance |
| Timeline |
| Microsoft |
| AerCap Holdings NV |
Microsoft and AerCap Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and AerCap Holdings
The main advantage of trading using opposite Microsoft and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. Palo Alto Networks | Microsoft vs. Uipath Inc | Microsoft vs. Block Inc | Microsoft vs. Adobe Systems Incorporated |
| 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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