Correlation Between Aegean Airlines and Teradyne
Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Teradyne 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 Teradyne 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 Teradyne, you can compare the effects of market volatilities on Aegean Airlines and Teradyne 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 Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Teradyne.
Diversification Opportunities for Aegean Airlines and Teradyne
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aegean and Teradyne is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne 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 Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Teradyne go up and down completely randomly.
Pair Corralation between Aegean Airlines and Teradyne
Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Teradyne. In addition to that, Aegean Airlines is 1.14 times more volatile than Teradyne. It trades about -0.21 of its total potential returns per unit of risk. Teradyne is currently generating about -0.06 per unit of volatility. If you would invest 11,175 in Teradyne on August 26, 2024 and sell it today you would lose (354.00) from holding Teradyne or give up 3.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aegean Airlines SA vs. Teradyne
Performance |
| Timeline |
| Aegean Airlines SA |
| Teradyne |
Aegean Airlines and Teradyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aegean Airlines and Teradyne
The main advantage of trading using opposite Aegean Airlines and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aegean Airlines position performs unexpectedly, Teradyne 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 Teradyne will offset losses from the drop in Teradyne'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 |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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