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
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aegean and Southwest is 0.18. 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 generate 1.25 times more return on investment than Southwest Airlines. However, Aegean Airlines is 1.25 times more volatile than Southwest Airlines Co. It trades about 0.11 of its potential returns per unit of risk. Southwest Airlines Co is currently generating about -0.23 per unit of risk. If you would invest 1,022 in Aegean Airlines SA on November 5, 2024 and sell it today you would earn a total of 45.00 from holding Aegean Airlines SA or generate 4.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| 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. Aya Gold Silver | Aegean Airlines vs. Yanzhou Coal Mining | Aegean Airlines vs. STRAYER EDUCATION | Aegean Airlines vs. ANGLO ASIAN MINING |
| Southwest Airlines vs. CDL INVESTMENT | Southwest Airlines vs. New Residential Investment | Southwest Airlines vs. SLR Investment Corp | Southwest Airlines vs. Lendlease Group |
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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