Correlation Between Magna International and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both Magna International 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 Magna International and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Aegean Airlines SA, you can compare the effects of market volatilities on Magna International 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 Magna International with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Aegean Airlines.
Diversification Opportunities for Magna International and Aegean Airlines
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Magna and Aegean is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Magna International 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 Magna International 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 Magna International 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 Magna International i.e., Magna International and Aegean Airlines go up and down completely randomly.
Pair Corralation between Magna International and Aegean Airlines
Considering the 90-day investment horizon Magna International is expected to generate 1.71 times more return on investment than Aegean Airlines. However, Magna International is 1.71 times more volatile than Aegean Airlines SA. It trades about 0.07 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.13 per unit of risk. If you would invest 4,158 in Magna International on August 30, 2024 and sell it today you would earn a total of 337.00 from holding Magna International or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Aegean Airlines SA
Performance |
| Timeline |
| Magna International |
| Aegean Airlines SA |
Magna International and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Aegean Airlines
The main advantage of trading using opposite Magna International and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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.| Magna International vs. Allison Transmission Holdings | Magna International vs. Aptiv PLC | Magna International vs. LKQ Corporation | Magna International vs. Lear Corporation |
| 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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