Correlation Between AEGEAN AIRLINES and Sumitomo Rubber
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Sumitomo Rubber 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 Sumitomo Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Sumitomo Rubber Industries, you can compare the effects of market volatilities on AEGEAN AIRLINES and Sumitomo Rubber 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 Sumitomo Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Sumitomo Rubber.
Diversification Opportunities for AEGEAN AIRLINES and Sumitomo Rubber
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AEGEAN and Sumitomo is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Sumitomo Rubber Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Rubber Indu 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 are associated (or correlated) with Sumitomo Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Rubber Indu has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Sumitomo Rubber go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Sumitomo Rubber
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the Sumitomo Rubber. In addition to that, AEGEAN AIRLINES is 1.19 times more volatile than Sumitomo Rubber Industries. It trades about -0.05 of its total potential returns per unit of risk. Sumitomo Rubber Industries is currently generating about 0.18 per unit of volatility. If you would invest 1,050 in Sumitomo Rubber Industries on November 8, 2024 and sell it today you would earn a total of 60.00 from holding Sumitomo Rubber Industries or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. Sumitomo Rubber Industries
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Sumitomo Rubber Indu |
AEGEAN AIRLINES and Sumitomo Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Sumitomo Rubber
The main advantage of trading using opposite AEGEAN AIRLINES and Sumitomo Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Sumitomo Rubber 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 Sumitomo Rubber will offset losses from the drop in Sumitomo Rubber's long position.| AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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