Correlation Between Algonquin Power and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Algonquin Power 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 Algonquin Power and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algonquin Power Utilities and Alaska Air Group, you can compare the effects of market volatilities on Algonquin Power 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 Algonquin Power with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algonquin Power and Alaska Air.
Diversification Opportunities for Algonquin Power and Alaska Air
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Algonquin and Alaska is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Algonquin Power Utilities 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 Algonquin Power 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 Algonquin Power Utilities 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 Algonquin Power i.e., Algonquin Power and Alaska Air go up and down completely randomly.
Pair Corralation between Algonquin Power and Alaska Air
Assuming the 90 days horizon Algonquin Power Utilities is expected to under-perform the Alaska Air. But the stock apears to be less risky and, when comparing its historical volatility, Algonquin Power Utilities is 2.12 times less risky than Alaska Air. The stock trades about -0.15 of its potential returns per unit of risk. The Alaska Air Group is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,876 in Alaska Air Group on September 15, 2024 and sell it today you would earn a total of 1,248 from holding Alaska Air Group or generate 25.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Algonquin Power Utilities vs. Alaska Air Group
Performance |
| Timeline |
| Algonquin Power Utilities |
| Alaska Air Group |
Algonquin Power and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algonquin Power and Alaska Air
The main advantage of trading using opposite Algonquin Power and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algonquin Power 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.| Algonquin Power vs. Superior Plus Corp | Algonquin Power vs. SIVERS SEMICONDUCTORS AB | Algonquin Power vs. Norsk Hydro ASA | Algonquin Power vs. Reliance Steel Aluminum |
| Alaska Air vs. Iridium Communications | Alaska Air vs. OFFICE DEPOT | Alaska Air vs. Cogent Communications Holdings | Alaska Air vs. Algonquin Power Utilities |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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