Correlation Between Aegean Airlines and Virtus Investment

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

Diversification Opportunities for Aegean Airlines and Virtus Investment

-0.87

Correlation Coefficient

Aegean Airlines  Virtus Investment

Pay attention - limited upside

The 3 months correlation between Aegean and Virtus is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Virtus Investment go up and down completely randomly.

Pair Corralation between Aegean Airlines and Virtus Investment

Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Virtus Investment. But the stock apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 1.52 times less risky than Virtus Investment. The stock trades about -0.18 of its potential returns per unit of risk. The Virtus Investment Partners is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  18,001  in Virtus Investment Partners on September 5, 2024 and sell it today you would earn a total of  5,399  from holding Virtus Investment Partners or generate 29.99% return on investment over 90 days.

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

Aegean Airlines SA  vs.  Virtus Investment Partners

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 fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Virtus Investment

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Virtus Investment Partners are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Virtus Investment reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aegean Airlines and Virtus Investment

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

The idea behind Aegean Airlines SA and Virtus Investment Partners 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.