Correlation Between AEGEAN AIRLINES and NEXT Plc
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and NEXT Plc 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 NEXT Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and NEXT plc, you can compare the effects of market volatilities on AEGEAN AIRLINES and NEXT Plc 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 NEXT Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and NEXT Plc.
Diversification Opportunities for AEGEAN AIRLINES and NEXT Plc
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AEGEAN and NEXT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and NEXT plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXT plc 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 NEXT Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXT plc has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and NEXT Plc go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and NEXT Plc
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 5.03 times less return on investment than NEXT Plc. In addition to that, AEGEAN AIRLINES is 1.18 times more volatile than NEXT plc. It trades about 0.01 of its total potential returns per unit of risk. NEXT plc is currently generating about 0.09 per unit of volatility. If you would invest 7,319 in NEXT plc on September 2, 2024 and sell it today you would earn a total of 4,591 from holding NEXT plc or generate 62.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. NEXT plc
Performance |
| Timeline |
| AEGEAN AIRLINES |
| NEXT plc |
AEGEAN AIRLINES and NEXT Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and NEXT Plc
The main advantage of trading using opposite AEGEAN AIRLINES and NEXT Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, NEXT Plc 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 NEXT Plc will offset losses from the drop in NEXT Plc's long position.| AEGEAN AIRLINES vs. Reinsurance Group of | AEGEAN AIRLINES vs. Iridium Communications | AEGEAN AIRLINES vs. Universal Insurance Holdings | AEGEAN AIRLINES vs. Cogent Communications Holdings |
| NEXT Plc vs. DELTA AIR LINES | NEXT Plc vs. Clearside Biomedical | NEXT Plc vs. URBAN OUTFITTERS | NEXT Plc vs. MYFAIR GOLD P |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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