Correlation Between TESCO PLC and Aegean Airlines
Can any of the company-specific risk be diversified away by investing in both TESCO PLC 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 TESCO PLC and Aegean Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TESCO PLC ADR1 and Aegean Airlines SA, you can compare the effects of market volatilities on TESCO PLC 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 TESCO PLC with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of TESCO PLC and Aegean Airlines.
Diversification Opportunities for TESCO PLC and Aegean Airlines
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between TESCO and Aegean is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding TESCO PLC ADR1 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 TESCO PLC 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 TESCO PLC ADR1 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 TESCO PLC i.e., TESCO PLC and Aegean Airlines go up and down completely randomly.
Pair Corralation between TESCO PLC and Aegean Airlines
Assuming the 90 days trading horizon TESCO PLC is expected to generate 31.25 times less return on investment than Aegean Airlines. But when comparing it to its historical volatility, TESCO PLC ADR1 is 1.3 times less risky than Aegean Airlines. It trades about 0.01 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 993.00 in Aegean Airlines SA on November 3, 2024 and sell it today you would earn a total of 77.00 from holding Aegean Airlines SA or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
TESCO PLC ADR1 vs. Aegean Airlines SA
Performance |
| Timeline |
| TESCO PLC ADR1 |
| Aegean Airlines SA |
TESCO PLC and Aegean Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TESCO PLC and Aegean Airlines
The main advantage of trading using opposite TESCO PLC and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TESCO PLC 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.| TESCO PLC vs. Alfa Financial Software | TESCO PLC vs. Constellation Software | TESCO PLC vs. Clean Energy Fuels | TESCO PLC vs. Kingdee International Software |
| Aegean Airlines vs. New Residential Investment | Aegean Airlines vs. Apollo Investment Corp | Aegean Airlines vs. Harmony Gold Mining | Aegean Airlines vs. ECHO INVESTMENT ZY |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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