Correlation Between AEGEAN AIRLINES and Iridium Communications
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Iridium Communications 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 Iridium Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Iridium Communications, you can compare the effects of market volatilities on AEGEAN AIRLINES and Iridium Communications 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 Iridium Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Iridium Communications.
Diversification Opportunities for AEGEAN AIRLINES and Iridium Communications
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AEGEAN and Iridium is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Iridium Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iridium Communications 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 Iridium Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iridium Communications has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Iridium Communications go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Iridium Communications
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.78 times more return on investment than Iridium Communications. However, AEGEAN AIRLINES is 1.29 times less risky than Iridium Communications. It trades about 0.06 of its potential returns per unit of risk. Iridium Communications is currently generating about -0.03 per unit of risk. If you would invest 660.00 in AEGEAN AIRLINES on November 29, 2024 and sell it today you would earn a total of 419.00 from holding AEGEAN AIRLINES or generate 63.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. Iridium Communications
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Iridium Communications |
AEGEAN AIRLINES and Iridium Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Iridium Communications
The main advantage of trading using opposite AEGEAN AIRLINES and Iridium Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Iridium Communications 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 Iridium Communications will offset losses from the drop in Iridium Communications' long position.| AEGEAN AIRLINES vs. Television Broadcasts Limited | AEGEAN AIRLINES vs. Information Services International Dentsu | AEGEAN AIRLINES vs. Yuexiu Transport Infrastructure | AEGEAN AIRLINES vs. Broadcom |
| Iridium Communications vs. Hyatt Hotels | Iridium Communications vs. INTERCONT HOTELS | Iridium Communications vs. DETALION GAMES SA | Iridium Communications vs. FRACTAL GAMING GROUP |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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