Correlation Between Charter Communications and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Charter Communications 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 Charter Communications and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Charter Communications Cl and Alaska Air Group, you can compare the effects of market volatilities on Charter Communications 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 Charter Communications with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Charter Communications and Alaska Air.
Diversification Opportunities for Charter Communications and Alaska Air
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Charter and Alaska is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications Cl 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 Charter Communications 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 Charter Communications Cl 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 Charter Communications i.e., Charter Communications and Alaska Air go up and down completely randomly.
Pair Corralation between Charter Communications and Alaska Air
Assuming the 90 days trading horizon Charter Communications Cl is expected to generate 2.18 times more return on investment than Alaska Air. However, Charter Communications is 2.18 times more volatile than Alaska Air Group. It trades about 0.24 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.33 per unit of risk. If you would invest 33,307 in Charter Communications Cl on August 31, 2024 and sell it today you would earn a total of 6,032 from holding Charter Communications Cl or generate 18.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Charter Communications Cl vs. Alaska Air Group
Performance |
| Timeline |
| Charter Communications |
| Alaska Air Group |
Charter Communications and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Charter Communications and Alaska Air
The main advantage of trading using opposite Charter Communications and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Charter Communications 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.| Charter Communications vs. Neometals | Charter Communications vs. Coor Service Management | Charter Communications vs. Aeorema Communications Plc | Charter Communications vs. JLEN Environmental Assets |
| Alaska Air vs. Neometals | Alaska Air vs. Coor Service Management | Alaska Air vs. Aeorema Communications Plc | Alaska Air vs. JLEN Environmental Assets |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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