Correlation Between Alaska Air and Ares Management
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Ares Management 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 Ares Management 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 Ares Management, you can compare the effects of market volatilities on Alaska Air and Ares Management 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 Ares Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Ares Management.
Diversification Opportunities for Alaska Air and Ares Management
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and Ares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group, and Ares Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ares Management 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 Ares Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ares Management has no effect on the direction of Alaska Air i.e., Alaska Air and Ares Management go up and down completely randomly.
Pair Corralation between Alaska Air and Ares Management
Assuming the 90 days trading horizon Alaska Air Group, is expected to generate 1.42 times more return on investment than Ares Management. However, Alaska Air is 1.42 times more volatile than Ares Management. It trades about 0.17 of its potential returns per unit of risk. Ares Management is currently generating about 0.1 per unit of risk. If you would invest 39,700 in Alaska Air Group, on November 4, 2024 and sell it today you would earn a total of 3,245 from holding Alaska Air Group, or generate 8.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group, vs. Ares Management
Performance |
| Timeline |
| Alaska Air Group, |
| Ares Management |
Alaska Air and Ares Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Ares Management
The main advantage of trading using opposite Alaska Air and Ares Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Ares Management 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 Ares Management will offset losses from the drop in Ares Management's long position.| Alaska Air vs. Tyson Foods | Alaska Air vs. Live Nation Entertainment, | Alaska Air vs. G2D Investments | Alaska Air vs. TAL Education Group |
| Ares Management vs. TechnipFMC plc | Ares Management vs. Autohome | Ares Management vs. Apartment Investment and | Ares Management vs. The Home Depot |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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