Correlation Between AEGEAN AIRLINES and Skandinaviska Enskilda
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Skandinaviska Enskilda 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 Skandinaviska Enskilda into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Skandinaviska Enskilda Banken, you can compare the effects of market volatilities on AEGEAN AIRLINES and Skandinaviska Enskilda 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 Skandinaviska Enskilda. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Skandinaviska Enskilda.
Diversification Opportunities for AEGEAN AIRLINES and Skandinaviska Enskilda
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AEGEAN and Skandinaviska is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Skandinaviska Enskilda Banken in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Skandinaviska Enskilda 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 Skandinaviska Enskilda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Skandinaviska Enskilda has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Skandinaviska Enskilda go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Skandinaviska Enskilda
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.98 times more return on investment than Skandinaviska Enskilda. However, AEGEAN AIRLINES is 1.02 times less risky than Skandinaviska Enskilda. It trades about 0.15 of its potential returns per unit of risk. Skandinaviska Enskilda Banken is currently generating about 0.08 per unit of risk. If you would invest 965.00 in AEGEAN AIRLINES on September 12, 2024 and sell it today you would earn a total of 40.00 from holding AEGEAN AIRLINES or generate 4.15% 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. Skandinaviska Enskilda Banken
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Skandinaviska Enskilda |
AEGEAN AIRLINES and Skandinaviska Enskilda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Skandinaviska Enskilda
The main advantage of trading using opposite AEGEAN AIRLINES and Skandinaviska Enskilda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Skandinaviska Enskilda 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 Skandinaviska Enskilda will offset losses from the drop in Skandinaviska Enskilda'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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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