Correlation Between Aena SME and Air Transport
Can any of the company-specific risk be diversified away by investing in both Aena SME and Air Transport 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 Aena SME and Air Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SME SA and Air Transport Services, you can compare the effects of market volatilities on Aena SME and Air Transport 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 Aena SME with a short position of Air Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SME and Air Transport.
Diversification Opportunities for Aena SME and Air Transport
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aena and Air is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aena SME SA and Air Transport Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Transport Services and Aena SME 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 Aena SME SA are associated (or correlated) with Air Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Transport Services has no effect on the direction of Aena SME i.e., Aena SME and Air Transport go up and down completely randomly.
Pair Corralation between Aena SME and Air Transport
Assuming the 90 days horizon Aena SME SA is expected to under-perform the Air Transport. But the stock apears to be less risky and, when comparing its historical volatility, Aena SME SA is 6.32 times less risky than Air Transport. The stock trades about -0.01 of its potential returns per unit of risk. The Air Transport Services is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,610 in Air Transport Services on August 31, 2024 and sell it today you would earn a total of 470.00 from holding Air Transport Services or generate 29.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SME SA vs. Air Transport Services
Performance |
| Timeline |
| Aena SME SA |
| Air Transport Services |
Aena SME and Air Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SME and Air Transport
The main advantage of trading using opposite Aena SME and Air Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SME position performs unexpectedly, Air Transport 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 Air Transport will offset losses from the drop in Air Transport's long position.| Aena SME vs. AENA SME UNSPADR110 | Aena SME vs. Superior Plus Corp | Aena SME vs. NMI Holdings | Aena SME vs. Origin Agritech |
| Air Transport vs. AENA SME UNSPADR110 | Air Transport vs. Superior Plus Corp | Air Transport vs. NMI Holdings | Air Transport vs. Origin Agritech |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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