Correlation Between AerCap Holdings and Air Transport
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Air Transport 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 Air Transport 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 Air Transport Services, you can compare the effects of market volatilities on AerCap Holdings and Air Transport 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 Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Air Transport.
Diversification Opportunities for AerCap Holdings and Air Transport
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AerCap and Air is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services 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 Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Air Transport go up and down completely randomly.
Pair Corralation between AerCap Holdings and Air Transport
Assuming the 90 days horizon AerCap Holdings NV is expected to generate 0.52 times more return on investment than Air Transport. However, AerCap Holdings NV is 1.91 times less risky than Air Transport. It trades about 0.07 of its potential returns per unit of risk. Air Transport Services is currently generating about 0.01 per unit of risk. If you would invest 5,650 in AerCap Holdings NV on August 28, 2024 and sell it today you would earn a total of 3,802 from holding AerCap Holdings NV or generate 67.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.79% |
| Values | Daily Returns |
AerCap Holdings NV vs. Air Transport Services
Performance |
| Timeline |
| AerCap Holdings NV |
| Air Transport Services |
AerCap Holdings and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and Air Transport
The main advantage of trading using opposite AerCap Holdings and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| AerCap Holdings vs. Enter Air SA | AerCap Holdings vs. CosmoSteel Holdings Limited | AerCap Holdings vs. Boiron SA | AerCap Holdings vs. Corsair Gaming |
| Air Transport vs. GEAR4MUSIC LS 10 | Air Transport vs. Harmony Gold Mining | Air Transport vs. REVO INSURANCE SPA | Air Transport vs. Webster Financial |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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