Correlation Between AerCap Holdings and Comtech Telecommunicatio

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

Diversification Opportunities for AerCap Holdings and Comtech Telecommunicatio

-0.93
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between AerCap and Comtech is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding AerCap Holdings NV and Comtech Telecommunications Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comtech Telecommunicatio 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 Comtech Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comtech Telecommunicatio has no effect on the direction of AerCap Holdings i.e., AerCap Holdings and Comtech Telecommunicatio go up and down completely randomly.

Pair Corralation between AerCap Holdings and Comtech Telecommunicatio

Considering the 90-day investment horizon AerCap Holdings NV is expected to generate 0.45 times more return on investment than Comtech Telecommunicatio. However, AerCap Holdings NV is 2.24 times less risky than Comtech Telecommunicatio. It trades about 0.07 of its potential returns per unit of risk. Comtech Telecommunications Corp is currently generating about -0.04 per unit of risk. If you would invest  5,015  in AerCap Holdings NV on December 29, 2023 and sell it today you would earn a total of  3,706  from holding AerCap Holdings NV or generate 73.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

AerCap Holdings NV  vs.  Comtech Telecommunications Cor

 Performance 
       Timeline  
AerCap Holdings NV 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in AerCap Holdings NV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, AerCap Holdings reported solid returns over the last few months and may actually be approaching a breakup point.
Comtech Telecommunicatio 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Comtech Telecommunications Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

AerCap Holdings and Comtech Telecommunicatio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with AerCap Holdings and Comtech Telecommunicatio

The main advantage of trading using opposite AerCap Holdings and Comtech Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AerCap Holdings position performs unexpectedly, Comtech Telecommunicatio 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 Comtech Telecommunicatio will offset losses from the drop in Comtech Telecommunicatio's long position.
The idea behind AerCap Holdings NV and Comtech Telecommunications Corp 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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