Correlation Between AEGEAN AIRLINES and Veolia Environnement
Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Veolia Environnement 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 Veolia Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEGEAN AIRLINES and Veolia Environnement SA, you can compare the effects of market volatilities on AEGEAN AIRLINES and Veolia Environnement 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 Veolia Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Veolia Environnement.
Diversification Opportunities for AEGEAN AIRLINES and Veolia Environnement
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AEGEAN and Veolia is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Veolia Environnement SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veolia Environnement 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 Veolia Environnement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veolia Environnement has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Veolia Environnement go up and down completely randomly.
Pair Corralation between AEGEAN AIRLINES and Veolia Environnement
Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.45 times more return on investment than Veolia Environnement. However, AEGEAN AIRLINES is 1.45 times more volatile than Veolia Environnement SA. It trades about 0.08 of its potential returns per unit of risk. Veolia Environnement SA is currently generating about 0.05 per unit of risk. If you would invest 494.00 in AEGEAN AIRLINES on September 14, 2024 and sell it today you would earn a total of 497.00 from holding AEGEAN AIRLINES or generate 100.61% 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. Veolia Environnement SA
Performance |
| Timeline |
| AEGEAN AIRLINES |
| Veolia Environnement |
AEGEAN AIRLINES and Veolia Environnement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEGEAN AIRLINES and Veolia Environnement
The main advantage of trading using opposite AEGEAN AIRLINES and Veolia Environnement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Veolia Environnement 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 Veolia Environnement will offset losses from the drop in Veolia Environnement's long position.| AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc |
| Veolia Environnement vs. Texas Roadhouse | Veolia Environnement vs. GALENA MINING LTD | Veolia Environnement vs. TITANIUM TRANSPORTGROUP | Veolia Environnement vs. AEGEAN AIRLINES |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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