Correlation Between Azul SA and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Azul SA and Aegean Airlines 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 Azul SA and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Azul SA and Aegean Airlines SA, you can compare the effects of market volatilities on Azul SA and Aegean Airlines 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 Azul SA with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Azul SA and Aegean Airlines.
Diversification Opportunities for Azul SA and Aegean Airlines
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Azul and Aegean is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Azul SA and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Azul SA 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 Azul SA are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Azul SA i.e., Azul SA and Aegean Airlines go up and down completely randomly.
Pair Corralation between Azul SA and Aegean Airlines
Given the investment horizon of 90 days Azul SA is expected to under-perform the Aegean Airlines. In addition to that, Azul SA is 2.29 times more volatile than Aegean Airlines SA. It trades about -0.09 of its total potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.03 per unit of volatility. If you would invest 1,428 in Aegean Airlines SA on February 17, 2024 and sell it today you would earn a total of 33.40 from holding Aegean Airlines SA or generate 2.34% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Azul SA vs. Aegean Airlines SA
Performance |
Timeline |
Azul SA |
Aegean Airlines SA |
Azul SA and Aegean Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Azul SA and Aegean Airlines
The main advantage of trading using opposite Azul SA and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Azul SA position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.The idea behind Azul SA and Aegean Airlines SA 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.Aegean Airlines vs. Hanover House | Aegean Airlines vs. Fearless Films | Aegean Airlines vs. SNM Gobal Holdings | Aegean Airlines vs. All For One |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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