Correlation Between Alaska Air and ACG Acquisition
Can any of the company-specific risk be diversified away by investing in both Alaska Air and ACG Acquisition 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 Alaska Air and ACG Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Air Group and ACG Acquisition Co, you can compare the effects of market volatilities on Alaska Air and ACG Acquisition 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 Alaska Air with a short position of ACG Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and ACG Acquisition.
Diversification Opportunities for Alaska Air and ACG Acquisition
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alaska and ACG is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and ACG Acquisition Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACG Acquisition and Alaska Air 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 Alaska Air Group are associated (or correlated) with ACG Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACG Acquisition has no effect on the direction of Alaska Air i.e., Alaska Air and ACG Acquisition go up and down completely randomly.
Pair Corralation between Alaska Air and ACG Acquisition
Assuming the 90 days trading horizon Alaska Air is expected to generate 87.29 times less return on investment than ACG Acquisition. But when comparing it to its historical volatility, Alaska Air Group is 32.29 times less risky than ACG Acquisition. It trades about 0.03 of its potential returns per unit of risk. ACG Acquisition Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,075 in ACG Acquisition Co on September 12, 2024 and sell it today you would lose (565.00) from holding ACG Acquisition Co or give up 52.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.89% |
| Values | Daily Returns |
Alaska Air Group vs. ACG Acquisition Co
Performance |
| Timeline |
| Alaska Air Group |
| ACG Acquisition |
Alaska Air and ACG Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and ACG Acquisition
The main advantage of trading using opposite Alaska Air and ACG Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, ACG Acquisition 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 ACG Acquisition will offset losses from the drop in ACG Acquisition's long position.| Alaska Air vs. Hong Kong Land | Alaska Air vs. Neometals | Alaska Air vs. Coor Service Management | Alaska Air vs. Fidelity Sustainable USD |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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