Correlation Between United Natural and AerCap Holdings
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and AerCap Holdings NV, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and AerCap Holdings.
Diversification Opportunities for United Natural and AerCap Holdings
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between United and AerCap is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods 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 United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and AerCap Holdings go up and down completely randomly.
Pair Corralation between United Natural and AerCap Holdings
Assuming the 90 days horizon United Natural Foods is expected to generate 1.98 times more return on investment than AerCap Holdings. However, United Natural is 1.98 times more volatile than AerCap Holdings NV. It trades about 0.36 of its potential returns per unit of risk. AerCap Holdings NV is currently generating about 0.26 per unit of risk. If you would invest 1,820 in United Natural Foods on August 28, 2024 and sell it today you would earn a total of 390.00 from holding United Natural Foods or generate 21.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Natural Foods vs. AerCap Holdings NV
Performance |
| Timeline |
| United Natural Foods |
| AerCap Holdings NV |
United Natural and AerCap Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and AerCap Holdings
The main advantage of trading using opposite United Natural and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.The idea behind United Natural Foods and AerCap Holdings NV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| AerCap Holdings vs. Enter Air SA | AerCap Holdings vs. CosmoSteel Holdings Limited | AerCap Holdings vs. Boiron SA | AerCap Holdings vs. Corsair Gaming |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments |