Correlation Between Aegean Airlines and Eastman Chemical
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Eastman Chemical 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 Eastman Chemical 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 Eastman Chemical, you can compare the effects of market volatilities on Aegean Airlines and Eastman Chemical 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 Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Eastman Chemical.
Diversification Opportunities for Aegean Airlines and Eastman Chemical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aegean and Eastman is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical 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 Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Eastman Chemical go up and down completely randomly.
Pair Corralation between Aegean Airlines and Eastman Chemical
Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Eastman Chemical. In addition to that, Aegean Airlines is 1.37 times more volatile than Eastman Chemical. It trades about -0.22 of its total potential returns per unit of risk. Eastman Chemical is currently generating about -0.01 per unit of volatility. If you would invest 10,670 in Eastman Chemical on August 28, 2024 and sell it today you would lose (86.00) from holding Eastman Chemical or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegean Airlines SA vs. Eastman Chemical
Performance |
| Timeline |
| Aegean Airlines SA |
| Eastman Chemical |
Aegean Airlines and Eastman Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and Eastman Chemical
The main advantage of trading using opposite Aegean Airlines and Eastman Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Eastman Chemical 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 Eastman Chemical will offset losses from the drop in Eastman Chemical's long position.| Aegean Airlines vs. Copa Holdings SA | Aegean Airlines vs. United Airlines Holdings | Aegean Airlines vs. Delta Air Lines | Aegean Airlines vs. SkyWest |
| Eastman Chemical vs. Olin Corporation | Eastman Chemical vs. Cabot | Eastman Chemical vs. Kronos Worldwide | Eastman Chemical vs. LyondellBasell Industries NV |
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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