Correlation Between BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES

Can any of the company-specific risk be diversified away by investing in both BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BUDWEISER BREWUNSPADR4 and AEGEAN AIRLINES, you can compare the effects of market volatilities on BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR/4 with a short position of AEGEAN AIRLINES. Check out your portfolio center. Please also check ongoing floating volatility patterns of BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES.

Diversification Opportunities for BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES

0.61

Correlation Coefficient

BUDWEISER BREWUNSPADR/4  AEGEAN AIRLINES

Poor diversification

The 3 months correlation between BUDWEISER and AEGEAN is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding BUDWEISER BREWUNSPADR4 and AEGEAN AIRLINES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEGEAN AIRLINES and BUDWEISER BREWUNSPADR/4 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 BUDWEISER BREWUNSPADR4 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 has no effect on the direction of BUDWEISER BREWUNSPADR/4 i.e., BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES go up and down completely randomly.

Pair Corralation between BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES

Assuming the 90 days trading horizon BUDWEISER BREWUNSPADR/4 is expected to generate 1.37 times less return on investment than AEGEAN AIRLINES. In addition to that, BUDWEISER BREWUNSPADR/4 is 2.38 times more volatile than AEGEAN AIRLINES. It trades about 0.09 of its total potential returns per unit of risk. AEGEAN AIRLINES is currently generating about 0.3 per unit of volatility. If you would invest  940.00  in AEGEAN AIRLINES on September 24, 2024 and sell it today you would earn a total of  66.00  from holding AEGEAN AIRLINES or generate 7.02% return on investment over 90 days.

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

BUDWEISER BREWUNSPADR4  vs.  AEGEAN AIRLINES

BUDWEISER BREWUNSPADR/4

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BUDWEISER BREWUNSPADR4 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, BUDWEISER BREWUNSPADR/4 is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 rather sound basic indicators, AEGEAN AIRLINES is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES

The main advantage of trading using opposite BUDWEISER BREWUNSPADR/4 and AEGEAN AIRLINES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BUDWEISER BREWUNSPADR/4 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's long position.

The idea behind BUDWEISER BREWUNSPADR4 and AEGEAN 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .