Correlation Between AEGEAN AIRLINES and Virtu Financial

Can any of the company-specific risk be diversified away by investing in both AEGEAN AIRLINES and Virtu Financial 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 AEGEAN AIRLINES and Virtu Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AEGEAN AIRLINES and Virtu Financial, you can compare the effects of market volatilities on AEGEAN AIRLINES and Virtu Financial 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 AEGEAN AIRLINES with a short position of Virtu Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and Virtu Financial.

Diversification Opportunities for AEGEAN AIRLINES and Virtu Financial

-0.58

Correlation Coefficient

AEGEAN AIRLINES  Virtu Financial

Excellent diversification

The 3 months correlation between AEGEAN and Virtu is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Virtu Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtu Financial and AEGEAN AIRLINES 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 AEGEAN AIRLINES are associated (or correlated) with Virtu Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtu Financial has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Virtu Financial go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Virtu Financial

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.12 times less return on investment than Virtu Financial. But when comparing it to its historical volatility, AEGEAN AIRLINES is 1.32 times less risky than Virtu Financial. It trades about 0.17 of its potential returns per unit of risk. Virtu Financial is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,360  in Virtu Financial on October 9, 2024 and sell it today you would earn a total of  120.00  from holding Virtu Financial or generate 3.57% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	94.12%
Values	Daily Returns

AEGEAN AIRLINES  vs.  Virtu Financial

AEGEAN AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEGEAN AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AEGEAN AIRLINES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Virtu Financial

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Virtu Financial are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtu Financial reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and Virtu Financial

The main advantage of trading using opposite AEGEAN AIRLINES and Virtu Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEGEAN AIRLINES position performs unexpectedly, Virtu Financial 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 Virtu Financial will offset losses from the drop in Virtu Financial's long position.

The idea behind AEGEAN AIRLINES and Virtu Financial 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.