Correlation Between AEGEAN AIRLINES and MARKET VECTR

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

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

Diversification Opportunities for AEGEAN AIRLINES and MARKET VECTR

-0.44

Correlation Coefficient

AEGEAN AIRLINES  MARKET VECTR

Very good diversification

The 3 months correlation between AEGEAN and MARKET is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and MARKET VECTR RETAIL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MARKET VECTR RETAIL 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 MARKET VECTR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MARKET VECTR RETAIL has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and MARKET VECTR go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and MARKET VECTR

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to generate 1.99 times more return on investment than MARKET VECTR. However, AEGEAN AIRLINES is 1.99 times more volatile than MARKET VECTR RETAIL. It trades about 0.16 of its potential returns per unit of risk. MARKET VECTR RETAIL is currently generating about -0.11 per unit of risk. If you would invest  1,002  in AEGEAN AIRLINES on December 22, 2024 and sell it today you would earn a total of  163.00  from holding AEGEAN AIRLINES or generate 16.27% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  MARKET VECTR RETAIL

AEGEAN AIRLINES

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AEGEAN AIRLINES are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, AEGEAN AIRLINES exhibited solid returns over the last few months and may actually be approaching a breakup point.

MARKET VECTR RETAIL

Risk-Adjusted Performance

Very Weak

Over the last 90 days MARKET VECTR RETAIL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, MARKET VECTR is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with AEGEAN AIRLINES and MARKET VECTR

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

The idea behind AEGEAN AIRLINES and MARKET VECTR RETAIL 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.