Correlation Between AEGEAN AIRLINES and Mitie Group

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

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

Diversification Opportunities for AEGEAN AIRLINES and Mitie Group

0.68

Correlation Coefficient

AEGEAN AIRLINES  Mitie Group

Poor diversification

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

Pair Corralation between AEGEAN AIRLINES and Mitie Group

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the Mitie Group. But the stock apears to be less risky and, when comparing its historical volatility, AEGEAN AIRLINES is 1.61 times less risky than Mitie Group. The stock trades about -0.08 of its potential returns per unit of risk. The Mitie Group PLC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  125,650  in Mitie Group PLC on September 12, 2024 and sell it today you would lose (5,100) from holding Mitie Group PLC or give up 4.06% of portfolio value over 90 days.

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

AEGEAN AIRLINES  vs.  Mitie Group PLC

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Mitie Group PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mitie Group PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Mitie Group 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 Mitie Group

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

The idea behind AEGEAN AIRLINES and Mitie Group PLC 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.