Correlation Between Alaska Air and ENN Energy
Can any of the company-specific risk be diversified away by investing in both Alaska Air and ENN Energy 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 ENN Energy 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 ENN Energy Holdings, you can compare the effects of market volatilities on Alaska Air and ENN Energy 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 ENN Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alaska Air and ENN Energy.
Diversification Opportunities for Alaska Air and ENN Energy
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alaska and ENN is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Alaska Air Group and ENN Energy Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENN Energy Holdings 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 ENN Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENN Energy Holdings has no effect on the direction of Alaska Air i.e., Alaska Air and ENN Energy go up and down completely randomly.
Pair Corralation between Alaska Air and ENN Energy
Assuming the 90 days trading horizon Alaska Air Group is expected to generate 1.04 times more return on investment than ENN Energy. However, Alaska Air is 1.04 times more volatile than ENN Energy Holdings. It trades about 0.36 of its potential returns per unit of risk. ENN Energy Holdings is currently generating about -0.07 per unit of risk. If you would invest 5,974 in Alaska Air Group on October 14, 2024 and sell it today you would earn a total of 666.00 from holding Alaska Air Group or generate 11.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alaska Air Group vs. ENN Energy Holdings
Performance |
| Timeline |
| Alaska Air Group |
| ENN Energy Holdings |
Alaska Air and ENN Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alaska Air and ENN Energy
The main advantage of trading using opposite Alaska Air and ENN Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alaska Air position performs unexpectedly, ENN Energy 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 ENN Energy will offset losses from the drop in ENN Energy's long position.| Alaska Air vs. WILLIS LEASE FIN | Alaska Air vs. DONGJIANG ENVIRONMENTAL H | Alaska Air vs. Nippon Steel | Alaska Air vs. HOCHSCHILD MINING |
| ENN Energy vs. Siamgas And Petrochemicals | ENN Energy vs. Altair Engineering | ENN Energy vs. Mitsubishi Gas Chemical | ENN Energy 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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