Correlation Between RYANAIR HLDGS and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both RYANAIR HLDGS 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 RYANAIR HLDGS and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RYANAIR HLDGS ADR and Aegean Airlines SA, you can compare the effects of market volatilities on RYANAIR HLDGS 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 RYANAIR HLDGS with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of RYANAIR HLDGS and Aegean Airlines.
Diversification Opportunities for RYANAIR HLDGS and Aegean Airlines
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between RYANAIR and Aegean is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding RYANAIR HLDGS ADR 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 RYANAIR HLDGS 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 RYANAIR HLDGS ADR 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 RYANAIR HLDGS i.e., RYANAIR HLDGS and Aegean Airlines go up and down completely randomly.
Pair Corralation between RYANAIR HLDGS and Aegean Airlines
Assuming the 90 days trading horizon RYANAIR HLDGS ADR is expected to generate 14.13 times more return on investment than Aegean Airlines. However, RYANAIR HLDGS is 14.13 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 -0.16 per unit of risk. If you would invest 3,840 in RYANAIR HLDGS ADR on August 28, 2024 and sell it today you would earn a total of 200.00 from holding RYANAIR HLDGS ADR or generate 5.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RYANAIR HLDGS ADR vs. Aegean Airlines SA
Performance |
| Timeline |
| RYANAIR HLDGS ADR |
| Aegean Airlines SA |
RYANAIR HLDGS and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RYANAIR HLDGS and Aegean Airlines
The main advantage of trading using opposite RYANAIR HLDGS and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RYANAIR HLDGS 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 RYANAIR HLDGS ADR 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. ULTRA CLEAN HLDGS | Aegean Airlines vs. Mitsubishi Gas Chemical | Aegean Airlines vs. MYFAIR GOLD P | Aegean Airlines vs. HF SINCLAIR P |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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