Correlation Between Alaska Energy and American Hotel
Can any of the company-specific risk be diversified away by investing in both Alaska Energy and American Hotel 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 Energy and American Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alaska Energy Metals and American Hotel Income, you can compare the effects of market volatilities on Alaska Energy and American Hotel 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 Energy with a short position of American Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Energy and American Hotel.
Diversification Opportunities for Alaska Energy and American Hotel
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alaska and American is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Energy Metals and American Hotel Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Hotel Income and Alaska Energy 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 Energy Metals are associated (or correlated) with American Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Hotel Income has no effect on the direction of Alaska Energy i.e., Alaska Energy and American Hotel go up and down completely randomly.
Pair Corralation between Alaska Energy and American Hotel
Assuming the 90 days trading horizon Alaska Energy Metals is expected to generate 1.37 times more return on investment than American Hotel. However, Alaska Energy is 1.37 times more volatile than American Hotel Income. It trades about -0.08 of its potential returns per unit of risk. American Hotel Income is currently generating about -0.42 per unit of risk. If you would invest 14.00 in Alaska Energy Metals on August 31, 2024 and sell it today you would lose (1.00) from holding Alaska Energy Metals or give up 7.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Alaska Energy Metals vs. American Hotel Income
Performance |
| Timeline |
| Alaska Energy Metals |
| American Hotel Income |
Alaska Energy and American Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Energy and American Hotel
The main advantage of trading using opposite Alaska Energy and American Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Energy position performs unexpectedly, American Hotel 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 American Hotel will offset losses from the drop in American Hotel's long position.| Alaska Energy vs. Ramp Metals | Alaska Energy vs. Canlan Ice Sports | Alaska Energy vs. Boat Rocker Media | Alaska Energy vs. Andlauer Healthcare Gr |
| American Hotel vs. Slate Office REIT | American Hotel vs. BTB Real Estate | American Hotel vs. Inovalis Real Estate | American Hotel vs. True North Commercial |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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