Correlation Between Alaska Air and NXP Semiconductors
Can any of the company-specific risk be diversified away by investing in both Alaska Air and NXP Semiconductors 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 NXP Semiconductors 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 NXP Semiconductors NV, you can compare the effects of market volatilities on Alaska Air and NXP Semiconductors 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 NXP Semiconductors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and NXP Semiconductors.
Diversification Opportunities for Alaska Air and NXP Semiconductors
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alaska and NXP is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group, and NXP Semiconductors NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NXP Semiconductors 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 NXP Semiconductors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NXP Semiconductors has no effect on the direction of Alaska Air i.e., Alaska Air and NXP Semiconductors go up and down completely randomly.
Pair Corralation between Alaska Air and NXP Semiconductors
Assuming the 90 days trading horizon Alaska Air Group, is expected to generate 1.06 times more return on investment than NXP Semiconductors. However, Alaska Air is 1.06 times more volatile than NXP Semiconductors NV. It trades about 0.06 of its potential returns per unit of risk. NXP Semiconductors NV is currently generating about 0.06 per unit of risk. If you would invest 20,700 in Alaska Air Group, on October 16, 2024 and sell it today you would earn a total of 19,680 from holding Alaska Air Group, or generate 95.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 68.98% |
| Values | Daily Returns |
Alaska Air Group, vs. NXP Semiconductors NV
Performance |
| Timeline |
| Alaska Air Group, |
| NXP Semiconductors |
Alaska Air and NXP Semiconductors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and NXP Semiconductors
The main advantage of trading using opposite Alaska Air and NXP Semiconductors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, NXP Semiconductors 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 NXP Semiconductors will offset losses from the drop in NXP Semiconductors' long position.| Alaska Air vs. Autohome | Alaska Air vs. Eastman Chemical | Alaska Air vs. Clover Health Investments, | Alaska Air vs. METISA Metalrgica Timboense |
| NXP Semiconductors vs. Bio Techne | NXP Semiconductors vs. Alaska Air Group, | NXP Semiconductors vs. Delta Air Lines | NXP Semiconductors vs. Trane Technologies plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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