Correlation Between International Consolidated and Aena SA
Can any of the company-specific risk be diversified away by investing in both International Consolidated and Aena SA 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 International Consolidated and Aena SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Consolidated Airlines and Aena SA, you can compare the effects of market volatilities on International Consolidated and Aena SA 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 International Consolidated with a short position of Aena SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Consolidated and Aena SA.
Diversification Opportunities for International Consolidated and Aena SA
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between International and Aena is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding International Consolidated Air and Aena SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aena SA and International Consolidated 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 International Consolidated Airlines are associated (or correlated) with Aena SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aena SA has no effect on the direction of International Consolidated i.e., International Consolidated and Aena SA go up and down completely randomly.
Pair Corralation between International Consolidated and Aena SA
Assuming the 90 days trading horizon International Consolidated Airlines is expected to generate 1.56 times more return on investment than Aena SA. However, International Consolidated is 1.56 times more volatile than Aena SA. It trades about 0.09 of its potential returns per unit of risk. Aena SA is currently generating about 0.08 per unit of risk. If you would invest 170.00 in International Consolidated Airlines on August 29, 2024 and sell it today you would earn a total of 132.00 from holding International Consolidated Airlines or generate 77.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Consolidated Air vs. Aena SA
Performance |
| Timeline |
| International Consolidated |
| Aena SA |
International Consolidated and Aena SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Consolidated and Aena SA
The main advantage of trading using opposite International Consolidated and Aena SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Consolidated position performs unexpectedly, Aena SA 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 Aena SA will offset losses from the drop in Aena SA's long position.| International Consolidated vs. Cox ABG Group | International Consolidated vs. Tier1 Technology SA | International Consolidated vs. Ibervalles SOCIMI SA | International Consolidated vs. Miciso Real Estate |
| Aena SA vs. Azaria Rental SOCIMI | Aena SA vs. Technomeca Aerospace SA | Aena SA vs. Borges Agricultural Industrial | Aena SA vs. Ebro Foods |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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