Correlation Between AEGEAN AIRLINES and Algonquin Power
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Algonquin Power 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 Algonquin Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Algonquin Power Utilities, you can compare the effects of market volatilities on AEGEAN AIRLINES and Algonquin Power 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 Algonquin Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Algonquin Power.
Diversification Opportunities for AEGEAN AIRLINES and Algonquin Power
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AEGEAN and Algonquin is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Algonquin Power Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Algonquin Power Utilities 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 Algonquin Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Algonquin Power Utilities has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Algonquin Power go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Algonquin Power
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.91 times more return on investment than Algonquin Power. However, AEGEAN AIRLINES is 1.1 times less risky than Algonquin Power. It trades about 0.27 of its potential returns per unit of risk. Algonquin Power Utilities is currently generating about -0.17 per unit of risk. If you would invest 940.00 in AEGEAN AIRLINES on September 19, 2024 and sell it today you would earn a total of 77.00 from holding AEGEAN AIRLINES or generate 8.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. Algonquin Power Utilities
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Algonquin Power Utilities |
AEGEAN AIRLINES and Algonquin Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Algonquin Power
The main advantage of trading using opposite AEGEAN AIRLINES and Algonquin Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Algonquin Power 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 Algonquin Power will offset losses from the drop in Algonquin Power's long position.| AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc |
| Algonquin Power vs. ABO GROUP ENVIRONMENT | Algonquin Power vs. Singapore Airlines Limited | Algonquin Power vs. AEGEAN AIRLINES | Algonquin Power vs. BLUESCOPE STEEL |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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