Correlation Between RBC Bearings and Aegean Airlines

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

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

Diversification Opportunities for RBC Bearings and Aegean Airlines

0.06

Correlation Coefficient

RBC Bearings  Aegean Airlines

Significant diversification

The 3 months correlation between RBC and Aegean is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding RBC Bearings Incorporated 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 RBC Bearings 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 RBC Bearings Incorporated 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 RBC Bearings i.e., RBC Bearings and Aegean Airlines go up and down completely randomly.

Pair Corralation between RBC Bearings and Aegean Airlines

Considering the 90-day investment horizon RBC Bearings is expected to generate 1.5 times less return on investment than Aegean Airlines. But when comparing it to its historical volatility, RBC Bearings Incorporated is 1.11 times less risky than Aegean Airlines. It trades about 0.09 of its potential returns per unit of risk. Aegean Airlines SA is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,025  in Aegean Airlines SA on December 24, 2024 and sell it today you would earn a total of  170.00  from holding Aegean Airlines SA or generate 16.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.31%
Values	Daily Returns

RBC Bearings Incorporated  vs.  Aegean Airlines SA

RBC Bearings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in RBC Bearings Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental drivers, RBC Bearings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Aegean Airlines SA

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aegean Airlines SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Aegean Airlines reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with RBC Bearings and Aegean Airlines

The main advantage of trading using opposite RBC Bearings and Aegean Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Bearings 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 RBC Bearings Incorporated 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.