Correlation Between AEGEAN AIRLINES and Volkswagen
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Volkswagen 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 Volkswagen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Volkswagen AG, you can compare the effects of market volatilities on AEGEAN AIRLINES and Volkswagen 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 Volkswagen. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Volkswagen.
Diversification Opportunities for AEGEAN AIRLINES and Volkswagen
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AEGEAN and Volkswagen is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Volkswagen AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Volkswagen AG 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 Volkswagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Volkswagen AG has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Volkswagen go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Volkswagen
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.0 times more return on investment than Volkswagen. However, AEGEAN AIRLINES is 1.0 times more volatile than Volkswagen AG. It trades about -0.06 of its potential returns per unit of risk. Volkswagen AG is currently generating about -0.13 per unit of risk. If you would invest 1,185 in AEGEAN AIRLINES on September 1, 2024 and sell it today you would lose (235.00) from holding AEGEAN AIRLINES or give up 19.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.48% |
| Values | Daily Returns |
AEGEAN AIRLINES vs. Volkswagen AG
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Volkswagen AG |
AEGEAN AIRLINES and Volkswagen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Volkswagen
The main advantage of trading using opposite AEGEAN AIRLINES and Volkswagen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Volkswagen 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 Volkswagen will offset losses from the drop in Volkswagen's long position.| AEGEAN AIRLINES vs. SIVERS SEMICONDUCTORS AB | AEGEAN AIRLINES vs. Darden Restaurants | AEGEAN AIRLINES vs. Reliance Steel Aluminum | AEGEAN AIRLINES vs. Q2M Managementberatung AG |
| Volkswagen vs. SIVERS SEMICONDUCTORS AB | Volkswagen vs. Darden Restaurants | Volkswagen vs. Reliance Steel Aluminum | Volkswagen vs. Q2M Managementberatung AG |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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