Correlation Between AEGEAN AIRLINES and International Consolidated

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

By analyzing existing cross correlation between AEGEAN AIRLINES and International Consolidated Airlines, you can compare the effects of market volatilities on AEGEAN AIRLINES and International Consolidated 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 International Consolidated. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEGEAN AIRLINES and International Consolidated.

Diversification Opportunities for AEGEAN AIRLINES and International Consolidated

-0.85

Correlation Coefficient

AEGEAN AIRLINES  International Consolidated

Pay attention - limited upside

The 3 months correlation between AEGEAN and International is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding AEGEAN AIRLINES and International Consolidated Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Consolidated 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 are associated (or correlated) with International Consolidated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Consolidated has no effect on the direction of AEGEAN AIRLINES i.e., AEGEAN AIRLINES and International Consolidated go up and down completely randomly.

Pair Corralation between AEGEAN AIRLINES and International Consolidated

Assuming the 90 days trading horizon AEGEAN AIRLINES is expected to under-perform the International Consolidated. But the stock apears to be less risky and, when comparing its historical volatility, AEGEAN AIRLINES is 1.64 times less risky than International Consolidated. The stock trades about -0.14 of its potential returns per unit of risk. The International Consolidated Airlines is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  212.00  in International Consolidated Airlines on September 1, 2024 and sell it today you would earn a total of  99.00  from holding International Consolidated Airlines or generate 46.7% return on investment over 90 days.

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

AEGEAN AIRLINES  vs.  International Consolidated Air

AEGEAN AIRLINES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEGEAN AIRLINES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

International Consolidated

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in International Consolidated Airlines are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, International Consolidated reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AEGEAN AIRLINES and International Consolidated

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

The idea behind AEGEAN AIRLINES and International Consolidated Airlines 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..