Correlation Between Aegean Airlines and Southwest Airlines
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Southwest Airlines 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 Southwest Airlines 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 Southwest Airlines Co, you can compare the effects of market volatilities on Aegean Airlines and Southwest Airlines 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 Southwest Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Southwest Airlines.
Diversification Opportunities for Aegean Airlines and Southwest Airlines
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aegean and Southwest is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Southwest Airlines Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southwest Airlines 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 Southwest Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southwest Airlines has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Southwest Airlines go up and down completely randomly.
Pair Corralation between Aegean Airlines and Southwest Airlines
Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Southwest Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.34 times less risky than Southwest Airlines. The stock trades about -0.29 of its potential returns per unit of risk. The Southwest Airlines Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 2,808 in Southwest Airlines Co on August 24, 2024 and sell it today you would earn a total of 188.00 from holding Southwest Airlines Co or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Aegean Airlines SA vs. Southwest Airlines Co
Performance |
| Timeline |
| Aegean Airlines SA |
| Southwest Airlines |
Aegean Airlines and Southwest Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and Southwest Airlines
The main advantage of trading using opposite Aegean Airlines and Southwest Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Southwest Airlines 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 Southwest Airlines will offset losses from the drop in Southwest Airlines' long position.| Aegean Airlines vs. RYANAIR HLDGS ADR | Aegean Airlines vs. Southwest Airlines Co | Aegean Airlines vs. China Southern Airlines | Aegean Airlines vs. Ryanair Holdings plc |
| Southwest Airlines vs. MAVEN WIRELESS SWEDEN | Southwest Airlines vs. KRISPY KREME DL 01 | Southwest Airlines vs. Infrastrutture Wireless Italiane | Southwest Airlines vs. CENTURIA OFFICE REIT |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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