Correlation Between Alaska Air and Gamma Communications
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Gamma Communications 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 Gamma Communications 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 Gamma Communications PLC, you can compare the effects of market volatilities on Alaska Air and Gamma Communications 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 Gamma Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Gamma Communications.
Diversification Opportunities for Alaska Air and Gamma Communications
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Alaska and Gamma is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Gamma Communications PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gamma Communications 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 Gamma Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gamma Communications PLC has no effect on the direction of Alaska Air i.e., Alaska Air and Gamma Communications go up and down completely randomly.
Pair Corralation between Alaska Air and Gamma Communications
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 2.78 times more return on investment than Gamma Communications. However, Alaska Air is 2.78 times more volatile than Gamma Communications PLC. It trades about 0.26 of its potential returns per unit of risk. Gamma Communications PLC is currently generating about 0.01 per unit of risk. If you would invest 5,187 in Alaska Air Group on September 12, 2024 and sell it today you would earn a total of 901.00 from holding Alaska Air Group or generate 17.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Gamma Communications PLC
Performance |
| Timeline |
| Alaska Air Group |
| Gamma Communications PLC |
Alaska Air and Gamma Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Gamma Communications
The main advantage of trading using opposite Alaska Air and Gamma Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Gamma Communications 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 Gamma Communications will offset losses from the drop in Gamma Communications' 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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