Correlation Between Aegean Airlines and Vale SA
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Vale SA 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 Vale SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aegean Airlines SA and Vale SA, you can compare the effects of market volatilities on Aegean Airlines and Vale SA 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 Vale SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Vale SA.
Diversification Opportunities for Aegean Airlines and Vale SA
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aegean and Vale is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Vale SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vale SA 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 SA are associated (or correlated) with Vale SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vale SA has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Vale SA go up and down completely randomly.
Pair Corralation between Aegean Airlines and Vale SA
Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Vale SA. But the stock apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.32 times less risky than Vale SA. The stock trades about -0.01 of its potential returns per unit of risk. The Vale SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 775.00 in Vale SA on September 14, 2024 and sell it today you would earn a total of 155.00 from holding Vale SA or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegean Airlines SA vs. Vale SA
Performance |
| Timeline |
| Aegean Airlines SA |
| Vale SA |
Aegean Airlines and Vale SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and Vale SA
The main advantage of trading using opposite Aegean Airlines and Vale SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Vale SA 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 Vale SA will offset losses from the drop in Vale SA's long position.| Aegean Airlines vs. RYANAIR HLDGS ADR | Aegean Airlines vs. Ryanair Holdings plc | Aegean Airlines vs. Superior Plus Corp | Aegean Airlines vs. SIVERS SEMICONDUCTORS AB |
| Vale SA vs. AM EAGLE OUTFITTERS | Vale SA vs. GRUPO CARSO A1 | Vale SA vs. Aegean Airlines SA | Vale SA vs. SIEM OFFSHORE NEW |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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