Correlation Between Alaska Air and Antofagasta PLC
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Antofagasta PLC 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 Antofagasta PLC 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 Antofagasta PLC, you can compare the effects of market volatilities on Alaska Air and Antofagasta PLC 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 Antofagasta PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Antofagasta PLC.
Diversification Opportunities for Alaska Air and Antofagasta PLC
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alaska and Antofagasta is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Antofagasta PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Antofagasta PLC 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 Antofagasta PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Antofagasta PLC has no effect on the direction of Alaska Air i.e., Alaska Air and Antofagasta PLC go up and down completely randomly.
Pair Corralation between Alaska Air and Antofagasta PLC
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.05 times more return on investment than Antofagasta PLC. However, Alaska Air is 1.05 times more volatile than Antofagasta PLC. It trades about 0.03 of its potential returns per unit of risk. Antofagasta PLC is currently generating about 0.01 per unit of risk. If you would invest 5,358 in Alaska Air Group on October 25, 2024 and sell it today you would earn a total of 1,404 from holding Alaska Air Group or generate 26.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.4% |
| Values | Daily Returns |
Alaska Air Group vs. Antofagasta PLC
Performance |
| Timeline |
| Alaska Air Group |
| Antofagasta PLC |
Alaska Air and Antofagasta PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Antofagasta PLC
The main advantage of trading using opposite Alaska Air and Antofagasta PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Antofagasta PLC 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 Antofagasta PLC will offset losses from the drop in Antofagasta PLC's long position.| Alaska Air vs. Toyota Motor Corp | Alaska Air vs. SoftBank Group Corp | Alaska Air vs. OTP Bank Nyrt | Alaska Air vs. ONEOK Inc |
| Antofagasta PLC vs. Schroders Investment Trusts | Antofagasta PLC vs. Beazer Homes USA | Antofagasta PLC vs. Premier Foods PLC | Antofagasta PLC vs. DFS Furniture 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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