Correlation Between Aegean Airlines and Netflix

Can any of the company-specific risk be diversified away by investing in both Aegean Airlines and Netflix 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 Netflix 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 Netflix, you can compare the effects of market volatilities on Aegean Airlines and Netflix 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 Netflix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aegean Airlines and Netflix.

Diversification Opportunities for Aegean Airlines and Netflix

-0.55

Correlation Coefficient

Aegean Airlines  Netflix

Excellent diversification

The 3 months correlation between Aegean and Netflix is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Netflix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netflix 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 Netflix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netflix has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Netflix go up and down completely randomly.

Pair Corralation between Aegean Airlines and Netflix

Assuming the 90 days horizon Aegean Airlines is expected to generate 4.47 times less return on investment than Netflix. In addition to that, Aegean Airlines is 1.13 times more volatile than Netflix. It trades about 0.07 of its total potential returns per unit of risk. Netflix is currently generating about 0.36 per unit of volatility. If you would invest  70,010  in Netflix on October 6, 2024 and sell it today you would earn a total of  16,480  from holding Netflix or generate 23.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.5%
Values	Daily Returns

Aegean Airlines SA  vs.  Netflix

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 nearly stable basic indicators, Aegean Airlines is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Netflix

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Netflix are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Netflix reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aegean Airlines and Netflix

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

The idea behind Aegean Airlines SA and Netflix 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.