Correlation Between AECOM TECHNOLOGY and AEGEAN AIRLINES
Can any of the company-specific risk be diversified away by investing in both AECOM TECHNOLOGY 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 AECOM TECHNOLOGY and AEGEAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AECOM TECHNOLOGY and AEGEAN AIRLINES, you can compare the effects of market volatilities on AECOM TECHNOLOGY 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 AECOM TECHNOLOGY with a short position of AEGEAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of AECOM TECHNOLOGY and AEGEAN AIRLINES.
Diversification Opportunities for AECOM TECHNOLOGY and AEGEAN AIRLINES
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AECOM and AEGEAN is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and AEGEAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEGEAN AIRLINES and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY 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 has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and AEGEAN AIRLINES go up and down completely randomly.
Pair Corralation between AECOM TECHNOLOGY and AEGEAN AIRLINES
Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 1.07 times more return on investment than AEGEAN AIRLINES. However, AECOM TECHNOLOGY is 1.07 times more volatile than AEGEAN AIRLINES. It trades about 0.11 of its potential returns per unit of risk. AEGEAN AIRLINES is currently generating about -0.04 per unit of risk. If you would invest 8,257 in AECOM TECHNOLOGY on September 26, 2024 and sell it today you would earn a total of 2,043 from holding AECOM TECHNOLOGY or generate 24.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AECOM TECHNOLOGY vs. AEGEAN AIRLINES
Performance |
| Timeline |
| AECOM TECHNOLOGY |
| AEGEAN AIRLINES |
AECOM TECHNOLOGY and AEGEAN AIRLINES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AECOM TECHNOLOGY and AEGEAN AIRLINES
The main advantage of trading using opposite AECOM TECHNOLOGY and AEGEAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AECOM TECHNOLOGY 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's long position.| AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Apple Inc | AECOM TECHNOLOGY vs. Microsoft | AECOM TECHNOLOGY vs. Microsoft |
| AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Apple Inc | AEGEAN AIRLINES vs. Microsoft | AEGEAN AIRLINES vs. Microsoft |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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