Correlation Between Aegean Airlines and Costco Wholesale

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

By analyzing existing cross correlation between Aegean Airlines SA and Costco Wholesale Corp, you can compare the effects of market volatilities on Aegean Airlines and Costco Wholesale 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 Costco Wholesale. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Costco Wholesale.

Diversification Opportunities for Aegean Airlines and Costco Wholesale

-0.69

Correlation Coefficient

Aegean Airlines  Costco Wholesale

Excellent diversification

The 3 months correlation between Aegean and Costco is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Costco Wholesale Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costco Wholesale Corp 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 SA are associated (or correlated) with Costco Wholesale. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costco Wholesale Corp has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Costco Wholesale go up and down completely randomly.

Pair Corralation between Aegean Airlines and Costco Wholesale

Assuming the 90 days horizon Aegean Airlines is expected to generate 2.24 times less return on investment than Costco Wholesale. In addition to that, Aegean Airlines is 1.55 times more volatile than Costco Wholesale Corp. It trades about 0.08 of its total potential returns per unit of risk. Costco Wholesale Corp is currently generating about 0.27 per unit of volatility. If you would invest  88,210  in Costco Wholesale Corp on September 13, 2024 and sell it today you would earn a total of  6,730  from holding Costco Wholesale Corp or generate 7.63% return on investment over 90 days.

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

Aegean Airlines SA  vs.  Costco Wholesale Corp

Aegean Airlines SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aegean Airlines SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Costco Wholesale Corp

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Costco Wholesale Corp are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Costco Wholesale displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aegean Airlines and Costco Wholesale

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

The idea behind Aegean Airlines SA and Costco Wholesale Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.