Correlation Between AerCap Holdings and Aarons

Can any of the company-specific risk be diversified away by investing in both AerCap Holdings and Aarons 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 Aarons 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 The Aarons, you can compare the effects of market volatilities on AerCap Holdings and Aarons 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 Aarons. Check out your portfolio center. Please also check ongoing floating volatility patterns of AerCap Holdings and Aarons.

Diversification Opportunities for AerCap Holdings and Aarons

0.49

Correlation Coefficient

AerCap Holdings  Aarons

Very weak diversification

The 3 months correlation between AerCap and Aarons is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and The Aarons in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aarons 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 Aarons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aarons has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Aarons go up and down completely randomly.

Pair Corralation between AerCap Holdings and Aarons

Considering the 90-day investment horizon AerCap Holdings is expected to generate 1.3 times less return on investment than Aarons. In addition to that, AerCap Holdings is 3.18 times more volatile than The Aarons. It trades about 0.06 of its total potential returns per unit of risk. The Aarons is currently generating about 0.26 per unit of volatility. If you would invest  985.00  in The Aarons on September 4, 2024 and sell it today you would earn a total of  24.00  from holding The Aarons or generate 2.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	35.94%
Values	Daily Returns

AerCap Holdings NV  vs.  The Aarons

AerCap Holdings NV

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, AerCap Holdings is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Aarons

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days The Aarons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain basic indicators, Aarons may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AerCap Holdings and Aarons

The main advantage of trading using opposite AerCap Holdings and Aarons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Aarons 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 Aarons will offset losses from the drop in Aarons' long position.

The idea behind AerCap Holdings NV and The Aarons 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.