Correlation Between Aena SA and International Consolidated
Can any of the company-specific risk be diversified away by investing in both Aena SA and International Consolidated 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 SA and International Consolidated into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aena SA and International Consolidated Airlines, you can compare the effects of market volatilities on Aena SA and International Consolidated 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 SA with a short position of International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aena SA and International Consolidated.
Diversification Opportunities for Aena SA and International Consolidated
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aena and International is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Aena SA and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated and Aena SA 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 SA are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of Aena SA i.e., Aena SA and International Consolidated go up and down completely randomly.
Pair Corralation between Aena SA and International Consolidated
Assuming the 90 days trading horizon Aena SA is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, Aena SA is 2.23 times less risky than International Consolidated. The stock trades about -0.08 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 257.00 in International Consolidated Airlines on August 25, 2024 and sell it today you would earn a total of 39.00 from holding International Consolidated Airlines or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aena SA vs. International Consolidated Air
Performance |
| Timeline |
| Aena SA |
| International Consolidated |
Aena SA and International Consolidated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aena SA and International Consolidated
The main advantage of trading using opposite Aena SA and International Consolidated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aena SA position performs unexpectedly, International Consolidated 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 International Consolidated will offset losses from the drop in International Consolidated's long position.| Aena SA vs. Borges Agricultural Industrial | Aena SA vs. NH Hoteles | Aena SA vs. All Iron Re | Aena SA vs. Hispanotels Inversiones SOCIMI |
| International Consolidated vs. Metrovacesa SA | International Consolidated vs. Elecnor SA | International Consolidated vs. Mapfre | International Consolidated vs. Amper SA |
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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