Correlation Between Aegean Airlines and Cars
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Cars 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 Cars 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 Cars Inc, you can compare the effects of market volatilities on Aegean Airlines and Cars 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 Cars. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Cars.
Diversification Opportunities for Aegean Airlines and Cars
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aegean and Cars is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Cars Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cars Inc 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 Cars. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cars Inc has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Cars go up and down completely randomly.
Pair Corralation between Aegean Airlines and Cars
Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Cars. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.04 times less risky than Cars. The pink sheet trades about -0.22 of its potential returns per unit of risk. The Cars Inc is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 1,615 in Cars Inc on August 27, 2024 and sell it today you would earn a total of 318.00 from holding Cars Inc or generate 19.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegean Airlines SA vs. Cars Inc
Performance |
| Timeline |
| Aegean Airlines SA |
| Cars Inc |
Aegean Airlines and Cars Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and Cars
The main advantage of trading using opposite Aegean Airlines and Cars positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Cars 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 Cars will offset losses from the drop in Cars' long position.| Aegean Airlines vs. Copa Holdings SA | Aegean Airlines vs. United Airlines Holdings | Aegean Airlines vs. Delta Air Lines | Aegean Airlines vs. SkyWest |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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