Correlation Between GATX and AerCap Holdings

Can any of the company-specific risk be diversified away by investing in both GATX 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 GATX and AerCap Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GATX Corporation and AerCap Holdings NV, you can compare the effects of market volatilities on GATX 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 GATX with a short position of AerCap Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of GATX and AerCap Holdings.

Diversification Opportunities for GATX and AerCap Holdings

0.35

Correlation Coefficient

GATX  AerCap Holdings

Weak diversification

The 3 months correlation between GATX and AerCap is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding GATX Corp. 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 GATX 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 GATX Corporation 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 GATX i.e., GATX and AerCap Holdings go up and down completely randomly.

Pair Corralation between GATX and AerCap Holdings

Given the investment horizon of 90 days GATX Corporation is expected to under-perform the AerCap Holdings. But the stock apears to be less risky and, when comparing its historical volatility, GATX Corporation is 1.38 times less risky than AerCap Holdings. The stock trades about -0.05 of its potential returns per unit of risk. The AerCap Holdings NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  9,385  in AerCap Holdings NV on January 10, 2025 and sell it today you would earn a total of  147.00  from holding AerCap Holdings NV or generate 1.57% return on investment over 90 days.

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

GATX Corp.  vs.  AerCap Holdings NV

GATX

Risk-Adjusted Performance

Very Weak

Over the last 90 days GATX Corporation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, GATX is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

AerCap Holdings NV

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 1 (%) 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 latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with GATX and AerCap Holdings

The main advantage of trading using opposite GATX and AerCap Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GATX 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 GATX Corporation 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.

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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.