Correlation Between Amazon and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Amazon and Aegean Airlines 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 Amazon and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amazon Inc and Aegean Airlines SA, you can compare the effects of market volatilities on Amazon and Aegean Airlines 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 Amazon with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amazon and Aegean Airlines.
Diversification Opportunities for Amazon and Aegean Airlines
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Amazon and Aegean is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Amazon Inc and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Amazon 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 Amazon Inc are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Amazon i.e., Amazon and Aegean Airlines go up and down completely randomly.
Pair Corralation between Amazon and Aegean Airlines
Given the investment horizon of 90 days Amazon Inc is expected to generate 1.02 times more return on investment than Aegean Airlines. However, Amazon is 1.02 times more volatile than Aegean Airlines SA. It trades about 0.15 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.22 per unit of risk. If you would invest 18,839 in Amazon Inc on August 28, 2024 and sell it today you would earn a total of 1,306 from holding Amazon Inc or generate 6.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amazon Inc vs. Aegean Airlines SA
Performance |
| Timeline |
| Amazon Inc |
| Aegean Airlines SA |
Amazon and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amazon and Aegean Airlines
The main advantage of trading using opposite Amazon and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amazon position performs unexpectedly, Aegean Airlines 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 Aegean Airlines will offset losses from the drop in Aegean Airlines' long position.The idea behind Amazon Inc and Aegean Airlines SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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