Correlation Between Alaska Air and Eneraqua Technologies
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Eneraqua Technologies 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 Eneraqua Technologies 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 Eneraqua Technologies PLC, you can compare the effects of market volatilities on Alaska Air and Eneraqua Technologies 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 Eneraqua Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Eneraqua Technologies.
Diversification Opportunities for Alaska Air and Eneraqua Technologies
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Alaska and Eneraqua is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Eneraqua Technologies PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eneraqua Technologies 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 Eneraqua Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eneraqua Technologies PLC has no effect on the direction of Alaska Air i.e., Alaska Air and Eneraqua Technologies go up and down completely randomly.
Pair Corralation between Alaska Air and Eneraqua Technologies
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.81 times more return on investment than Eneraqua Technologies. However, Alaska Air Group is 1.23 times less risky than Eneraqua Technologies. It trades about 0.29 of its potential returns per unit of risk. Eneraqua Technologies PLC is currently generating about -0.12 per unit of risk. If you would invest 5,258 in Alaska Air Group on October 30, 2024 and sell it today you would earn a total of 1,762 from holding Alaska Air Group or generate 33.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.5% |
| Values | Daily Returns |
Alaska Air Group vs. Eneraqua Technologies PLC
Performance |
| Timeline |
| Alaska Air Group |
| Eneraqua Technologies PLC |
Alaska Air and Eneraqua Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Eneraqua Technologies
The main advantage of trading using opposite Alaska Air and Eneraqua Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Eneraqua Technologies 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 Eneraqua Technologies will offset losses from the drop in Eneraqua Technologies' long position.| Alaska Air vs. Aptitude Software Group | Alaska Air vs. Axfood AB | Alaska Air vs. Vitec Software Group | Alaska Air vs. Micron Technology |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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