Correlation Between Alaska Air and Dairy Farm
Can any of the company-specific risk be diversified away by investing in both Alaska Air and Dairy Farm 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 Dairy Farm 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 Dairy Farm International, you can compare the effects of market volatilities on Alaska Air and Dairy Farm 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 Dairy Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and Dairy Farm.
Diversification Opportunities for Alaska Air and Dairy Farm
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Alaska and Dairy is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and Dairy Farm International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dairy Farm International 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 Dairy Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dairy Farm International has no effect on the direction of Alaska Air i.e., Alaska Air and Dairy Farm go up and down completely randomly.
Pair Corralation between Alaska Air and Dairy Farm
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 0.57 times more return on investment than Dairy Farm. However, Alaska Air Group is 1.76 times less risky than Dairy Farm. It trades about 0.3 of its potential returns per unit of risk. Dairy Farm International is currently generating about 0.16 per unit of risk. If you would invest 3,241 in Alaska Air Group on September 3, 2024 and sell it today you would earn a total of 1,736 from holding Alaska Air Group or generate 53.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. Dairy Farm International
Performance |
| Timeline |
| Alaska Air Group |
| Dairy Farm International |
Alaska Air and Dairy Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and Dairy Farm
The main advantage of trading using opposite Alaska Air and Dairy Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, Dairy Farm 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 Dairy Farm will offset losses from the drop in Dairy Farm's long position.| Alaska Air vs. Zijin Mining Group | Alaska Air vs. Jacquet Metal Service | Alaska Air vs. Western Copper and | Alaska Air vs. United Airlines Holdings |
| Dairy Farm vs. BRIT AMER TOBACCO | Dairy Farm vs. Pentair plc | Dairy Farm vs. IMPERIAL TOBACCO | Dairy Farm 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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