Correlation Between AEGEAN AIRLINES and COSTCO WHOLESALE

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

By analyzing existing cross correlation between AEGEAN AIRLINES and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on AEGEAN AIRLINES and COSTCO WHOLESALE 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 COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and COSTCO WHOLESALE.

Diversification Opportunities for AEGEAN AIRLINES and COSTCO WHOLESALE

-0.41

Correlation Coefficient

AEGEAN AIRLINES  COSTCO WHOLESALE

Very good diversification

The 3 months correlation between AEGEAN and COSTCO is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR 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 COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and COSTCO WHOLESALE

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.04 times less return on investment than COSTCO WHOLESALE. But when comparing it to its historical volatility, AEGEAN AIRLINES is 1.12 times less risky than COSTCO WHOLESALE. It trades about 0.03 of its potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,754  in COSTCO WHOLESALE CDR on October 9, 2024 and sell it today you would earn a total of  46.00  from holding COSTCO WHOLESALE CDR or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

AEGEAN AIRLINES  vs.  COSTCO WHOLESALE CDR

AEGEAN AIRLINES

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, COSTCO WHOLESALE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with AEGEAN AIRLINES and COSTCO WHOLESALE

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

The idea behind AEGEAN AIRLINES and COSTCO WHOLESALE CDR 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.