Correlation Between Amedeo Air and Alaska Air
Can any of the company-specific risk be diversified away by investing in both Amedeo Air 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 Amedeo Air and Alaska Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amedeo Air Four and Alaska Air Group, you can compare the effects of market volatilities on Amedeo Air 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 Amedeo Air with a short position of Alaska Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedeo Air and Alaska Air.
Diversification Opportunities for Amedeo Air and Alaska Air
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amedeo and Alaska is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four 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 Amedeo 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 Amedeo Air Four 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 Amedeo Air i.e., Amedeo Air and Alaska Air go up and down completely randomly.
Pair Corralation between Amedeo Air and Alaska Air
Assuming the 90 days trading horizon Amedeo Air is expected to generate 1.49 times less return on investment than Alaska Air. But when comparing it to its historical volatility, Amedeo Air Four is 2.41 times less risky than Alaska Air. It trades about 0.51 of its potential returns per unit of risk. Alaska Air Group is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,738 in Alaska Air Group on August 30, 2024 and sell it today you would earn a total of 542.00 from holding Alaska Air Group or generate 11.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amedeo Air Four vs. Alaska Air Group
Performance |
| Timeline |
| Amedeo Air Four |
| Alaska Air Group |
Amedeo Air and Alaska Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amedeo Air and Alaska Air
The main advantage of trading using opposite Amedeo Air and Alaska Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedeo Air 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.| Amedeo Air vs. Toyota Motor Corp | Amedeo Air vs. SoftBank Group Corp | Amedeo Air vs. OTP Bank Nyrt | Amedeo Air vs. Las Vegas Sands |
| Alaska Air vs. Tungsten West PLC | Alaska Air vs. Argo Group Limited | Alaska Air vs. Hardide PLC | Alaska Air vs. Versarien 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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