Correlation Between Alaska Air and Amneal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Amneal Pharmaceuticals 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 Amneal Pharmaceuticals 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 Amneal Pharmaceuticals, you can compare the effects of market volatilities on Alaska Air and Amneal Pharmaceuticals 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 Amneal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Amneal Pharmaceuticals.
Diversification Opportunities for Alaska Air and Amneal Pharmaceuticals
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Alaska and Amneal is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Amneal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amneal Pharmaceuticals 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 Amneal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amneal Pharmaceuticals has no effect on the direction of Alaska Air i.e., Alaska Air and Amneal Pharmaceuticals go up and down completely randomly.
Pair Corralation between Alaska Air and Amneal Pharmaceuticals
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.42 times more return on investment than Amneal Pharmaceuticals. However, Alaska Air is 1.42 times more volatile than Amneal Pharmaceuticals. It trades about 0.26 of its potential returns per unit of risk. Amneal Pharmaceuticals is currently generating about -0.07 per unit of risk. If you would invest 4,996 in Alaska Air Group on September 22, 2024 and sell it today you would earn a total of 1,000.00 from holding Alaska Air Group or generate 20.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Amneal Pharmaceuticals
Performance |
| Timeline |
| Alaska Air Group |
| Amneal Pharmaceuticals |
Alaska Air and Amneal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Amneal Pharmaceuticals
The main advantage of trading using opposite Alaska Air and Amneal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Amneal Pharmaceuticals 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 Amneal Pharmaceuticals will offset losses from the drop in Amneal Pharmaceuticals' long position.The idea behind Alaska Air Group and Amneal Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Amneal Pharmaceuticals vs. Wizz Air Holdings | Amneal Pharmaceuticals vs. Chuangs China Investments | Amneal Pharmaceuticals vs. Apollo Investment Corp | Amneal Pharmaceuticals vs. Alaska Air Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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