Correlation Between AEGEAN AIRLINES and Entravision Communications

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

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

Diversification Opportunities for AEGEAN AIRLINES and Entravision Communications

-0.68

Correlation Coefficient

AEGEAN AIRLINES  Entravision Communications

Excellent diversification

The 3 months correlation between AEGEAN and Entravision is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Entravision Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entravision Communications 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 Entravision Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entravision Communications has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Entravision Communications go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Entravision Communications

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.51 times more return on investment than Entravision Communications. However, AEGEAN AIRLINES is 1.95 times less risky than Entravision Communications. It trades about 0.07 of its potential returns per unit of risk. Entravision Communications is currently generating about -0.01 per unit of risk. If you would invest  529.00  in AEGEAN AIRLINES on October 4, 2024 and sell it today you would earn a total of  464.00  from holding AEGEAN AIRLINES or generate 87.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

AEGEAN AIRLINES  vs.  Entravision Communications

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.

Entravision Communications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Entravision Communications are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Entravision Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and Entravision Communications

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

The idea behind AEGEAN AIRLINES and Entravision Communications 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.