Correlation Between AEGEAN AIRLINES and ADT
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and ADT 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 ADT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and ADT Inc, you can compare the effects of market volatilities on AEGEAN AIRLINES and ADT 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 ADT. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and ADT.
Diversification Opportunities for AEGEAN AIRLINES and ADT
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AEGEAN and ADT is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc 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 ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and ADT go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and ADT
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the ADT. But the stock apears to be less risky and, when comparing its historical volatility, AEGEAN AIRLINES is 1.51 times less risky than ADT. The stock trades about -0.08 of its potential returns per unit of risk. The ADT Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 708.00 in ADT Inc on October 18, 2024 and sell it today you would lose (8.00) from holding ADT Inc or give up 1.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. ADT Inc
Performance |
| Timeline |
| AEGEAN AIRLINES |
| ADT Inc |
AEGEAN AIRLINES and ADT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and ADT
The main advantage of trading using opposite AEGEAN AIRLINES and ADT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, ADT 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 ADT will offset losses from the drop in ADT's long position.| AEGEAN AIRLINES vs. National Beverage Corp | AEGEAN AIRLINES vs. AECOM TECHNOLOGY | AEGEAN AIRLINES vs. Kingdee International Software | AEGEAN AIRLINES vs. X FAB Silicon Foundries |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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