Correlation Between AerCap Holdings and Airports
Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Airports 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 Airports 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 Airports of Thailand, you can compare the effects of market volatilities on AerCap Holdings and Airports 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 Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Airports.
Diversification Opportunities for AerCap Holdings and Airports
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between AerCap and Airports is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand 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 Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Airports go up and down completely randomly.
Pair Corralation between AerCap Holdings and Airports
Assuming the 90 days horizon AerCap Holdings is expected to generate 1.86 times less return on investment than Airports. But when comparing it to its historical volatility, AerCap Holdings NV is 2.85 times less risky than Airports. It trades about 0.07 of its potential returns per unit of risk. Airports of Thailand is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 79.00 in Airports of Thailand on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Airports of Thailand or generate 110.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AerCap Holdings NV vs. Airports of Thailand
Performance |
| Timeline |
| AerCap Holdings NV |
| Airports of Thailand |
AerCap Holdings and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AerCap Holdings and Airports
The main advantage of trading using opposite AerCap Holdings and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| AerCap Holdings vs. Aena SME SA | AerCap Holdings vs. Superior Plus Corp | AerCap Holdings vs. SIVERS SEMICONDUCTORS AB | AerCap Holdings vs. Norsk Hydro ASA |
| Airports vs. Fast Retailing Co | Airports vs. COSTCO WHOLESALE CDR | Airports vs. ALTAIR RES INC | Airports vs. Norwegian Air Shuttle |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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