Correlation Between AerCap Holdings and Hertz Global

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

Diversification Opportunities for AerCap Holdings and Hertz Global

0.45

Correlation Coefficient

AerCap Holdings  Hertz Global

Very weak diversification

The 3 months correlation between AerCap and Hertz is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Hertz Global Hldgs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hertz Global Hldgs 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 Hertz Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hertz Global Hldgs has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Hertz Global go up and down completely randomly.

Pair Corralation between AerCap Holdings and Hertz Global

Considering the 90-day investment horizon AerCap Holdings is expected to generate 1.59 times less return on investment than Hertz Global. But when comparing it to its historical volatility, AerCap Holdings NV is 3.25 times less risky than Hertz Global. It trades about 0.03 of its potential returns per unit of risk. Hertz Global Hldgs is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  217.00  in Hertz Global Hldgs on October 1, 2024 and sell it today you would lose (2.00) from holding Hertz Global Hldgs or give up 0.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AerCap Holdings NV  vs.  Hertz Global Hldgs

AerCap Holdings NV

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 2 (%) 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.

Hertz Global Hldgs

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hertz Global Hldgs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Hertz Global is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with AerCap Holdings and Hertz Global

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

The idea behind AerCap Holdings NV and Hertz Global Hldgs 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.