Correlation Between Fastenal and Aegean Airlines

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

By analyzing existing cross correlation between Fastenal Company and Aegean Airlines SA, you can compare the effects of market volatilities on Fastenal and Aegean Airlines 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 Fastenal with a short position of Aegean Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fastenal and Aegean Airlines.

Diversification Opportunities for Fastenal and Aegean Airlines

-0.16

Correlation Coefficient

Fastenal  Aegean Airlines

Good diversification

The 3 months correlation between Fastenal and Aegean is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Fastenal Company and Aegean Airlines SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aegean Airlines SA and Fastenal 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 Fastenal Company are associated (or correlated) with Aegean Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aegean Airlines SA has no effect on the direction of Fastenal i.e., Fastenal and Aegean Airlines go up and down completely randomly.

Pair Corralation between Fastenal and Aegean Airlines

Given the investment horizon of 90 days Fastenal Company is expected to generate 1.24 times more return on investment than Aegean Airlines. However, Fastenal is 1.24 times more volatile than Aegean Airlines SA. It trades about 0.06 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about -0.1 per unit of risk. If you would invest  6,372  in Fastenal Company on October 13, 2024 and sell it today you would earn a total of  791.00  from holding Fastenal Company or generate 12.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.95%
Values	Daily Returns

Fastenal Company  vs.  Aegean Airlines SA

Fastenal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fastenal Company has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Fastenal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

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

Pair Trading with Fastenal and Aegean Airlines

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

The idea behind Fastenal Company and Aegean Airlines SA 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.