Correlation Between AEGEAN AIRLINES and INTUITIVE SURGICAL

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

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

Diversification Opportunities for AEGEAN AIRLINES and INTUITIVE SURGICAL

0.62

Correlation Coefficient

AEGEAN AIRLINES  INTUITIVE SURGICAL

Poor diversification

The 3 months correlation between AEGEAN and INTUITIVE is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and INTUITIVE SURGICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INTUITIVE SURGICAL 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 INTUITIVE SURGICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INTUITIVE SURGICAL has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and INTUITIVE SURGICAL go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and INTUITIVE SURGICAL

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 0.89 times more return on investment than INTUITIVE SURGICAL. However, AEGEAN AIRLINES is 1.13 times less risky than INTUITIVE SURGICAL. It trades about 0.14 of its potential returns per unit of risk. INTUITIVE SURGICAL is currently generating about 0.06 per unit of risk. If you would invest  936.00  in AEGEAN AIRLINES on December 2, 2024 and sell it today you would earn a total of  132.00  from holding AEGEAN AIRLINES or generate 14.1% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  INTUITIVE SURGICAL

AEGEAN AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AEGEAN AIRLINES exhibited solid returns over the last few months and may actually be approaching a breakup point.

INTUITIVE SURGICAL

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in INTUITIVE SURGICAL are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, INTUITIVE SURGICAL is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AEGEAN AIRLINES and INTUITIVE SURGICAL

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

The idea behind AEGEAN AIRLINES and INTUITIVE SURGICAL 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.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.