Correlation Between AEGEAN AIRLINES and Microsoft

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

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

Diversification Opportunities for AEGEAN AIRLINES and Microsoft

-0.71

Correlation Coefficient

AEGEAN AIRLINES  Microsoft

Pay attention - limited upside

The 3 months correlation between AEGEAN and Microsoft is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft 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 Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and Microsoft go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and Microsoft

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.0 times more return on investment than Microsoft. However, AEGEAN AIRLINES is 1.0 times more volatile than Microsoft. It trades about 0.2 of its potential returns per unit of risk. Microsoft is currently generating about -0.14 per unit of risk. If you would invest  993.00  in AEGEAN AIRLINES on December 30, 2024 and sell it today you would earn a total of  228.00  from holding AEGEAN AIRLINES or generate 22.96% 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.  Microsoft

AEGEAN AIRLINES

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, AEGEAN AIRLINES exhibited solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

Very Weak

Over the last 90 days Microsoft has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with AEGEAN AIRLINES and Microsoft

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

The idea behind AEGEAN AIRLINES and Microsoft 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.