Correlation Between Aegean Airlines and Sphere Entertainment

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

Diversification Opportunities for Aegean Airlines and Sphere Entertainment

0.62

Correlation Coefficient

Aegean Airlines  Sphere Entertainment

Poor diversification

The 3 months correlation between Aegean and Sphere is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Aegean Airlines SA and Sphere Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sphere Entertainment 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 Sphere Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sphere Entertainment has no effect on the direction of Aegean Airlines i.e., Aegean Airlines and Sphere Entertainment go up and down completely randomly.

Pair Corralation between Aegean Airlines and Sphere Entertainment

Assuming the 90 days horizon Aegean Airlines SA is expected to under-perform the Sphere Entertainment. But the pink sheet apears to be less risky and, when comparing its historical volatility, Aegean Airlines SA is 2.08 times less risky than Sphere Entertainment. The pink sheet trades about -0.13 of its potential returns per unit of risk. The Sphere Entertainment Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  3,999  in Sphere Entertainment Co on September 18, 2024 and sell it today you would lose (194.00) from holding Sphere Entertainment Co or give up 4.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Aegean Airlines SA  vs.  Sphere Entertainment Co

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 weak 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.

Sphere Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sphere Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Sphere Entertainment is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Aegean Airlines and Sphere Entertainment

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

The idea behind Aegean Airlines SA and Sphere Entertainment Co 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.