Correlation Between AerCap Holdings and Grupo Aeroportuario
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Grupo Aeroportuario 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 Grupo Aeroportuario 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 Grupo Aeroportuario del, you can compare the effects of market volatilities on AerCap Holdings and Grupo Aeroportuario 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 Grupo Aeroportuario. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Grupo Aeroportuario.
Diversification Opportunities for AerCap Holdings and Grupo Aeroportuario
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AerCap and Grupo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Grupo Aeroportuario del in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aeroportuario del 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 Grupo Aeroportuario. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aeroportuario del has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Grupo Aeroportuario go up and down completely randomly.
Pair Corralation between AerCap Holdings and Grupo Aeroportuario
Assuming the 90 days horizon AerCap Holdings is expected to generate 2.35 times less return on investment than Grupo Aeroportuario. But when comparing it to its historical volatility, AerCap Holdings NV is 1.02 times less risky than Grupo Aeroportuario. It trades about 0.22 of its potential returns per unit of risk. Grupo Aeroportuario del is currently generating about 0.5 of returns per unit of risk over similar time horizon. If you would invest 14,906 in Grupo Aeroportuario del on September 3, 2024 and sell it today you would earn a total of 2,394 from holding Grupo Aeroportuario del or generate 16.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AerCap Holdings NV vs. Grupo Aeroportuario del
Performance |
| Timeline |
| AerCap Holdings NV |
| Grupo Aeroportuario del |
AerCap Holdings and Grupo Aeroportuario Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and Grupo Aeroportuario
The main advantage of trading using opposite AerCap Holdings and Grupo Aeroportuario positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Grupo Aeroportuario 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 Grupo Aeroportuario will offset losses from the drop in Grupo Aeroportuario's long position.| AerCap Holdings vs. Perseus Mining Limited | AerCap Holdings vs. FAST RETAIL ADR | AerCap Holdings vs. Ubisoft Entertainment SA | AerCap Holdings vs. CNVISION MEDIA |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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