Correlation Between Aegean Airlines and Volaris
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Volaris 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 Aegean Airlines and Volaris into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegean Airlines SA and Volaris, you can compare the effects of market volatilities on Aegean Airlines and Volaris 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 Aegean Airlines with a short position of Volaris. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Volaris.
Diversification Opportunities for Aegean Airlines and Volaris
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Aegean and Volaris is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Volaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volaris and Aegean Airlines 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 Aegean Airlines SA are associated (or correlated) with Volaris. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volaris has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Volaris go up and down completely randomly.
Pair Corralation between Aegean Airlines and Volaris
Assuming the 90 days horizon Aegean Airlines SA is expected to generate 0.72 times more return on investment than Volaris. However, Aegean Airlines SA is 1.38 times less risky than Volaris. It trades about 0.08 of its potential returns per unit of risk. Volaris is currently generating about -0.05 per unit of risk. If you would invest 920.00 in Aegean Airlines SA on January 19, 2024 and sell it today you would earn a total of 397.00 from holding Aegean Airlines SA or generate 43.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 99.56% |
Values | Daily Returns |
Aegean Airlines SA vs. Volaris
Performance |
Timeline |
Aegean Airlines SA |
Volaris |
Aegean Airlines and Volaris Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Aegean Airlines and Volaris
The main advantage of trading using opposite Aegean Airlines and Volaris positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Volaris 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 Volaris will offset losses from the drop in Volaris' long position.Aegean Airlines vs. AAC Clyde Space | Aegean Airlines vs. Avante Logixx | Aegean Airlines vs. Corby Spirit and | Aegean Airlines vs. HUMANA INC |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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