Correlation Between AES Corp and Alaska Air
Can any of the company-specific risk be diversified away by investing in both AES Corp and Alaska Air 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 AES Corp and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AES Corp and Alaska Air Group, you can compare the effects of market volatilities on AES Corp and Alaska Air 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 AES Corp with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of AES Corp and Alaska Air.
Diversification Opportunities for AES Corp and Alaska Air
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between AES and Alaska is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding AES Corp and Alaska Air Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alaska Air Group and AES Corp 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 AES Corp are associated (or correlated) with Alaska Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alaska Air Group has no effect on the direction of AES Corp i.e., AES Corp and Alaska Air go up and down completely randomly.
Pair Corralation between AES Corp and Alaska Air
Assuming the 90 days trading horizon AES Corp is expected to under-perform the Alaska Air. In addition to that, AES Corp is 1.78 times more volatile than Alaska Air Group. It trades about -0.22 of its total potential returns per unit of risk. Alaska Air Group is currently generating about 0.24 per unit of volatility. If you would invest 4,884 in Alaska Air Group on September 2, 2024 and sell it today you would earn a total of 381.00 from holding Alaska Air Group or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AES Corp vs. Alaska Air Group
Performance |
| Timeline |
| AES Corp |
| Alaska Air Group |
AES Corp and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AES Corp and Alaska Air
The main advantage of trading using opposite AES Corp and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AES Corp position performs unexpectedly, Alaska Air 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 Alaska Air will offset losses from the drop in Alaska Air's long position.| AES Corp vs. Taylor Maritime Investments | AES Corp vs. Wyndham Hotels Resorts | AES Corp vs. Park Hotels Resorts | AES Corp vs. Host Hotels Resorts |
| Alaska Air vs. Uniper SE | Alaska Air vs. Mulberry Group PLC | Alaska Air vs. London Security Plc | Alaska Air vs. Triad Group PLC |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |